EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
U.S. TELEPACIFIC HOLDINGS CORP.,
TPMC ACQUISITION CORP.
AND
MPOWER HOLDING CORPORATION
Dated as of May 4, 2006
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TABLE OF CONTENTS
ARTICLE I THE MERGER...........................................................1
SECTION 1.1 The Merger.............................................1
SECTION 1.2 Effective Time; Closing Date...........................2
SECTION 1.3 Effect of the Merger...................................2
SECTION 1.4 Certificate of Incorporation; By-laws..................2
SECTION 1.5 Board of Directors and Officers........................2
SECTION 1.6 Further Assurances.....................................2
ARTICLE II EFFECTS OF THE MERGER; CONSIDERATION................................3
SECTION 2.1 Conversion of Company Securities........................3
SECTION 2.2 Exchange Procedures.....................................4
SECTION 2.3 Deposit at Closing......................................6
SECTION 2.4 Dissenting Shares.......................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................7
SECTION 3.1 Organization, Standing and Power........................7
SECTION 3.2 Authority; Approvals....................................7
SECTION 3.3 Capitalization; Equity Interests........................8
SECTION 3.4 Conflicts; Consents.....................................9
SECTION 3.5 Financial Information and SEC Reports;
Undisclosed Liabilities................................10
SECTION 3.6 Disclosure Documents...................................12
SECTION 3.7 Absence of Changes.....................................12
SECTION 3.8 Assets and Properties; Network.........................12
SECTION 3.9 Other Agreements.......................................13
SECTION 3.10 Environmental Matters..................................14
SECTION 3.11 Litigation.............................................14
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TABLE OF CONTENTS (Cont'd)
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SECTION 3.12 Compliance; Licenses and Permits.......................15
SECTION 3.13 Intellectual Property..................................16
SECTION 3.14 Tax Matters............................................18
SECTION 3.15 Labor Relations; Employees.............................19
SECTION 3.16 Transactions with Related Parties......................21
SECTION 3.17 Brokers................................................21
SECTION 3.18 Insurance..............................................21
SECTION 3.19 Suppliers..............................................22
SECTION 3.20 Takeover Statutes......................................22
SECTION 3.21 Opinion of Financial Advisor...........................22
SECTION 3.22 Rights Agreement.......................................22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB.............22
SECTION 4.1 Organization; Standing and Power.......................22
SECTION 4.2 Authority; Approvals...................................23
SECTION 4.3 Conflicts; Consents....................................23
SECTION 4.4 Disclosure Documents...................................24
SECTION 4.5 Brokers................................................24
SECTION 4.6 Litigation.............................................24
SECTION 4.7 Operations of Merger Sub...............................24
SECTION 4.8 Financing..............................................24
ARTICLE V CERTAIN COVENANTS...................................................25
SECTION 5.1 Conduct of Business.....................................25
SECTION 5.2 Access and Information; Confidentiality.................27
SECTION 5.3 Proxy Statement.........................................28
SECTION 5.4 Company Stockholders' Meeting...........................29
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TABLE OF CONTENTS (Cont'd)
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SECTION 5.5 Acquisition Proposals...................................29
SECTION 5.6 Reasonable Efforts; Further Assurances..................31
SECTION 5.7 Public Announcements....................................33
SECTION 5.8 Indemnification of Directors and Officers...............34
SECTION 5.9 Expenses................................................35
SECTION 5.10 Section 16 Compliance...................................35
SECTION 5.11 Supplemental Information................................35
SECTION 5.12 Tax Matters.............................................35
SECTION 5.13 State Takeover Statutes; Rights Agreement...............36
SECTION 5.14 Employee Benefits Matters...............................36
SECTION 5.15 Financing...............................................37
SECTION 5.16 Letter of Credit........................................38
ARTICLE VI CONDITIONS PRECEDENT...............................................38
SECTION 6.1 Conditions Precedent to Obligations of Each Party.......38
SECTION 6.2 Conditions Precedent to Obligations of Buyer and
Merger Sub..............................................39
SECTION 6.3 Conditions Precedent to Obligations of the Company......40
ARTICLE VII TERMINATION.......................................................41
SECTION 7.1 Termination.............................................41
SECTION 7.2 Effect of Termination and Abandonment...................43
SECTION 7.3 Termination Fee.........................................43
ARTICLE VIII MISCELLANEOUS....................................................44
SECTION 8.1 Entire Agreement........................................44
SECTION 8.2 Assignment and Binding Effect; Third Party
Beneficiaries...........................................44
SECTION 8.3 Notices.................................................44
SECTION 8.4 Amendment and Modification; Waiver......................45
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TABLE OF CONTENTS (Cont'd)
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SECTION 8.5 Governing Law; Consent to Jurisdiction..................46
SECTION 8.6 Waiver of Jury Trial....................................46
SECTION 8.7 Severability............................................46
SECTION 8.8 Counterparts............................................47
SECTION 8.9 Enforcement.............................................47
SECTION 8.10 Non-Survival of Representations and Warranties..........47
SECTION 8.11 Damages.................................................47
SECTION 8.12 Disclosure Schedule.....................................47
ARTICLE IX DEFINED TERMS; INTERPRETATION......................................48
SECTION 9.1 Defined Terms...........................................48
SECTION 9.2 Terms Defined Elsewhere.................................53
SECTION 9.3 Interpretation..........................................54
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THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of May
4, 2006, is by and among U.S. TelePacific Holdings Corp., a Delaware corporation
("Buyer"), TPMC Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Buyer ("Merger Sub"), and Mpower Holding Corporation, a Delaware
corporation (the "Company").
INTRODUCTION
A. The respective Boards of Directors of each of Buyer, Merger Sub and
the Company have unanimously (i) approved, and declared advisable and in the
best interests of Buyer, Merger Sub and the Company and their respective
stockholders, the merger of Merger Sub with and into the Company (the "Merger")
in accordance with the provisions of the Delaware General Corporation Law (the
"DGCL"), and subject to the terms and conditions of this Agreement and (ii)
approved this Agreement.
B. Buyer, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
C. As a condition and an inducement to the willingness of Buyer and
Merger Sub to enter into this Agreement, certain stockholders of the Company
have concurrently herewith entered into certain Voting Agreements with Buyer in
the form attached hereto as Exhibit A (the "Voting Agreements").
D. As a condition and an inducement to the willingness of the Company
to enter into this Agreement, Buyer and Merger Sub have arranged for the
delivery of a letter of credit in the form attached hereto as Exhibit B (the
"Initial Letter of Credit") for the benefit of the Company.
E. Certain capitalized terms have the meanings set forth in Section
9.1.
AGREEMENT
In consideration of the mutual representations, warranties, covenants
and other agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. At the Effective Time, subject to the terms and
conditions of this Agreement and in accordance with the DGCL, (i) Merger Sub
shall be merged with and into the Company, (ii) the separate corporate existence
of Merger Sub shall cease and (iii) the Company shall be the surviving
corporation (the Company, as the surviving corporation in the Merger is
sometimes referred to herein as the "Surviving Corporation") and shall continue
its legal existence under the DGCL.
SECTION 1.2 Effective Time; Closing Date. Subject to the terms and
conditions of this Agreement, the Company and Merger Sub shall cause the Merger
to be consummated on the Closing Date by filing a certificate of merger with the
Secretary of State of the State of Delaware (the "Certificate of Merger"). The
Merger shall become effective at such time as the Certificate of Merger is duly
filed in accordance with the provisions of Section 251 of the DGCL, or at such
later time as may be stated by the parties in the Certificate of Merger (the
"Effective Time"). The closing of the Merger (the "Closing") shall take place at
the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx,
at 10:00 a.m., New York City time, two Business Days after the date on which the
last of the conditions set forth in Article VI shall have been satisfied or
waived (other than those conditions that by their nature are to be satisfied at
the Closing, but subject to the satisfaction or waiver of those conditions), or
on such other date, time and place as the Company and Buyer may mutually agree
in writing (such date on which the Closing actually occurs being referred to
herein as the "Closing Date").
SECTION 1.3 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the DGCL.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers, franchises and
assets of the Company and Merger Sub shall vest in the Surviving Corporation,
and all debts, liabilities, obligations and duties of the Company and Merger Sub
shall become the debts, liabilities, obligations and duties of the Surviving
Corporation.
SECTION 1.4 Certificate of Incorporation; By-laws.
(a) The certificate of incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be amended in its
entirety at the Effective Time to read in the form attached as Exhibit
C hereto, and as so amended, shall be the certificate of incorporation
of the Surviving Corporation until thereafter amended as provided by
Law and such certificate of incorporation.
(b) The by-laws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the by-laws of the Surviving Corporation,
until thereafter amended as provided by Law and such by-laws.
SECTION 1.5 Board of Directors and Officers. The Board of Directors and
the officers of Merger Sub immediately prior to the Effective Time shall, from
and after the Effective Time, be the Board of Directors and officers,
respectively, of the Surviving Corporation, each to hold office until his or her
respective successors are duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the certificate of
incorporation and by-laws of the Surviving Corporation.
SECTION 1.6 Further Assurances. If at any time after the Effective Time
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation, its right, title or interest in, to or under any of
the properties, rights, privileges, powers, franchises or assets of either the
Company or Merger Sub or (b) otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and directors or
their designees shall be authorized to execute
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and deliver, in the name and on behalf of the Company or Merger Sub, all such
deeds, bills of sale, assignments and assurances and do, in the name and on
behalf of the Company or Merger Sub, all such other acts and things necessary,
desirable or proper to vest, perfect or confirm its right, title or interest in,
to or under any of the properties, rights, privileges, powers, franchises or
assets of the Company or Merger Sub, as applicable, and otherwise to carry out
the purposes of this Agreement.
ARTICLE II
EFFECTS OF THE MERGER; CONSIDERATION
SECTION 2.1 Conversion of Company Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of the Company, Merger
Sub, Buyer, the Stockholders, the Warrant Holders or the Option Holders:
(a) Each share of common stock of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted
into and become one validly issued, fully paid and nonassessable share
of common stock of the Surviving Corporation;
(b) Each share of Common Stock, together with the related Right
attached thereto, that is owned by (i) the Company as treasury stock,
(ii) Buyer, (iii) Merger Sub, (iv) any other wholly owned Subsidiary of
Buyer or (v) any wholly owned Subsidiary of the Company, shall be
canceled without any conversion thereof and no payment or distribution
shall be made with respect thereto;
(c) Except as otherwise provided in clause (b) above and subject
to Section 2.4, each share of Common Stock outstanding immediately
prior to the Effective Time, together with the related Right attached
thereto, shall be converted into the right to receive $1.92 in cash,
payable to the holder thereof, without interest (the "Common Stock
Consideration"). All shares of Common Stock converted into the right to
receive the Common Stock Consideration pursuant to this Section 2.1(c)
shall cease to be outstanding, and shall be cancelled and retired and
shall cease to exist, and each holder of a certificate which
immediately prior to the Effective Time represented shares of Common
Stock shall thereafter cease to have any rights with respect to such
shares, except the right to receive the Common Stock Consideration to
be issued in consideration therefor upon the surrender of such
certificate;
(d) Each Warrant issued and outstanding immediately prior to the
Effective Time shall be converted into the right to receive a sum in
cash equal to such Warrant's Warrant Cancellation Payment, without
interest, and all such Warrants shall no longer be outstanding and
shall automatically be cancelled and shall cease to exist, and each
former Warrant Holder shall cease to have any rights with respect
thereto, other than the right to receive the consideration set forth
herein. The Company shall use its commercially reasonable efforts to
take all actions necessary to effectuate the foregoing. Any payments
made pursuant to this Section 2.1(d) shall be net of all applicable
withholding taxes, which shall be properly and timely remitted to the
appropriate Governmental Entity;
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(e) Each Option issued and outstanding immediately prior to the
Effective Time, whether or not then exercisable, shall be converted
into the right to receive, on or as soon as practicable following the
Closing Date, a sum in cash equal to such Option's Option Cancellation
Payment, without interest, and all such Options shall no longer be
outstanding and shall automatically be cancelled and shall cease to
exist, and each former Option Holder shall cease to have any rights
with respect thereto, other than the right to receive the consideration
set forth herein. Notwithstanding anything to the contrary contained in
this Agreement, if the exercise price per share of Common Stock of any
Option is equal to or greater than the Common Stock Consideration, such
Option shall be cancelled without any cash payment being made in
respect thereof. The Company shall use its commercially reasonable
efforts to take all actions necessary to effectuate the foregoing. Any
payments made pursuant to this Section 2.1(e) shall be net of all
applicable withholding taxes, which shall be properly and timely
remitted to the appropriate Governmental Entity. As of the Effective
Time, the Option Plans shall terminate and all rights under any
provision of any other plan, program or arrangement of the Company or
any Subsidiary of the Company providing for the issuance or grant of
any other interest in respect of the capital stock of the Company or
any Subsidiary of the Company shall be cancelled; and
(f) The restrictions on each share of Restricted Stock shall
lapse immediately prior to, and effective upon the occurrence of, the
Effective Time, and each share of Restricted Stock shall be fully
vested in each holder thereof at such time, and each such share of
Restricted Stock will be treated at the Effective Time the same as, and
have the same rights and be subject to the same conditions (including
the conditions set forth in Section 2.2) hereunder as, each share of
Common Stock not subject to any restrictions as provided in Section
2.1.
SECTION 2.2 Exchange Procedures.
(a) Prior to the Effective Time, Buyer shall appoint the Paying
Agent to act as agent for the holders of shares of Common Stock and
Warrants in connection with the Merger and to receive the funds to
which such holders shall become entitled pursuant to this Article II.
(b) Promptly following the Effective Time, the Surviving
Corporation shall cause to be mailed, or otherwise make available, to
each holder of record of Certificates entitled to receive consideration
pursuant to Section 2.1 the form of Letter of Transmittal. After the
Effective Time, each holder of certificates or other instruments
formerly evidencing shares of Common Stock or Warrants (the
"Certificates"), upon surrender of such Certificates to the Paying
Agent, together with a properly completed Letter of Transmittal and
such other documents as may be reasonably required by the Paying Agent,
shall be entitled to receive from the Paying Agent, in exchange
therefor, the aggregate consideration for such shares of Common Stock
or Warrants, as the case may be, in cash as contemplated by this
Agreement, and the Certificates so surrendered shall be cancelled. The
Surviving Corporation, the Paying Agent and Buyer shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant
to this Agreement to any holder of shares of Common Stock or Warrants,
as the case may be,
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such amounts as the Surviving Corporation, the Paying Agent or
Buyer is required to deduct and withhold with respect to the
making of such payment under any provision of applicable Tax Law.
To the extent that amounts are so withheld by the Surviving
Corporation, the Paying Agent or Buyer, such withheld amounts
shall be treated for all purposes of this Agreement as having
been paid to the holder of the shares of Common Stock or
Warrants, as the case may be, in respect of which such deduction
and withholding was made by the Surviving Corporation, the Paying
Agent or Buyer, as the case may be, and the Surviving
Corporation, the Paying Agent or Buyer, as applicable, shall
properly and timely remit any such withheld amounts to the
appropriate Governmental Entity. Until surrendered as
contemplated by this Section 2.2 (other than Certificates
representing Dissenting Shares), each Certificate shall be deemed
at any time after the Effective Time to represent only the right
to receive the aggregate consideration for such shares of Common
Stock or Warrants, as the case may be, in cash as contemplated by
this Agreement, without interest thereon. All cash consideration
delivered upon the surrender of Certificates in accordance with
the terms of this Section 2.2 shall be deemed to have been paid
in full satisfaction of all rights pertaining to shares of Common
Stock and Warrants theretofore represented by such Certificates.
(c) If any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by
the Buyer, the posting by such Person of a bond or other surety in such
amount as the Buyer may reasonably direct as indemnity against any
claim that may be made with respect to such Certificate and subject to
such other reasonable conditions as the Buyer may impose, the Paying
Agent shall deliver in exchange for such Certificate the consideration
into which shares of Common Stock or Warrants theretofore represented
by such Certificate shall have been converted pursuant to this Article
II.
(d) If any payment under this Article II is to be made to a
Person other than the Person in whose name any Certificate surrendered
in exchange therefor is registered, it shall be a condition of payment
that the Certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the Person requesting
such payment shall pay any transfer or other similar Taxes required by
reason of the payment to a Person other than the registered holder of
the Certificate surrendered or such Person shall establish to the
satisfaction of the Surviving Corporation that such Taxes have been
paid or are not applicable.
(e) None of Buyer, Merger Sub or the Surviving Corporation shall
be liable to any Person in respect of any cash delivered to a public
official pursuant to any applicable abandoned property, escheat or
similar Law. At any time following the expiration of one (1) year after
the Effective Time, the Surviving Corporation shall, in its sole
discretion, be entitled to require the Paying Agent to deliver to it
any funds (including any interest received with respect thereto) which
had been made available to the Paying Agent and which have not been
disbursed to holders of Certificates, and such funds shall thereafter
become the property of the Surviving Corporation. Such funds may be
commingled with the general funds of the Surviving Corporation and
shall be free and clear of any claims or interests of any Person.
Thereafter, such holders shall be entitled to look to the
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Surviving Corporation (subject to any applicable abandoned
property, escheat or similar Law) only as general creditors
thereof with respect to the applicable consideration payable as
contemplated by this Agreement (net of any amounts that would be
subject to withholding) upon due surrender of their Certificates,
without any interest thereon.
(f) At the Effective Time, the stock transfer books of the
Company shall be closed, and there shall be no further registration of
transfer in the stock transfer books of the Surviving Corporation of
the shares of Common Stock, Warrants or Options, as the case may be,
that were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation or the Paying Agent for any reason, they shall be canceled
and exchanged as provided in this Section 2.2.
(g) As soon as practicable following the Effective Time, the
Surviving Corporation shall, in exchange for the Options that became
entitled to receive the consideration specified in Section 2.1, make
the Option Cancellation Payment in respect of each such Option to each
Option Holder. The Surviving Corporation and Buyer shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant
to this Agreement to any Option Holder such amounts as the Surviving
Corporation or Buyer is required to deduct and withhold with respect to
the making of such payment under any provision of applicable Tax Law or
with respect to the making of other payments hereunder in connection
with other equity interests in the Company held by such Option Holder
(provided that such amounts have not been previously deducted and
withheld). To the extent that amounts are so withheld by the Surviving
Corporation or Buyer, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the Option Holder in
respect of which such deduction and withholding was made by the
Surviving Corporation or Buyer, as the case may be, and the Surviving
Corporation or Buyer, as applicable, shall properly and timely remit
any such withheld amounts to the appropriate Governmental Entity.
SECTION 2.3 Deposit at Closing. At the Closing, Buyer shall deposit (or
cause to be deposited) with the Paying Agent, for exchange and payment in
accordance with this Article II, an amount equal to the sum of (x) the aggregate
Common Stock Consideration and (y) the aggregate Warrant Cancellation Payments.
The Paying Agent shall invest funds held by it for purposes of this Article II
as directed by Buyer, on a daily basis. Any interest or other income resulting
from such investments shall be paid to Buyer.
SECTION 2.4 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, shares of the Company's capital stock that are outstanding
immediately prior to the Effective Time and which are held by holders
who shall not have voted in favor of the Merger or consented thereto in
writing and who shall have demanded properly in writing appraisal for
such shares in accordance with Section 262 of the DGCL (collectively,
the "Dissenting Shares") shall not be converted into or represent the
right to receive the consideration set forth in Section 2.1. Such
holders shall be entitled to receive such consideration as is
determined to be due with respect to such Dissenting Shares in
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accordance with the provisions of Section 262 of the DGCL, except that
all Dissenting Shares held by holders who shall have failed to perfect
or who effectively shall have withdrawn or lost their rights to
appraisal of such shares under Section 262 of the DGCL shall thereupon
be deemed to have been converted into and to have become exchangeable
for, as of the Effective Time, the right to receive the consideration
specified in Section 2.1, without any interest thereon, upon surrender,
in the manner provided in Section 2.2, of the certificate or
certificates that formerly evidenced such Dissenting Shares.
(b) The Company shall give Buyer (i) prompt written notice of any
demands for appraisal received by the Company, withdrawals of such
demands and any other instruments served pursuant to the DGCL and
received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal
under the DGCL. The Company shall not, except with the prior written
consent of Buyer, make any payment with respect to any demands for
appraisal or offer to settle or settle any such demands.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule delivered by the Company
prior to, or concurrently with, the execution of this Agreement (the "Disclosure
Schedule"), which Disclosure Schedule identifies the Section (or, if applicable,
subsection) to which such exception relates, the Company hereby represents and
warrants to Buyer and Merger Sub as follows:
SECTION 3.1 Organization, Standing and Power. Each of the Company and
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and assets and to carry on its business as now being conducted. Each of the
Company and its Subsidiaries is duly licensed or qualified to do business and is
in good standing in each jurisdiction in which such qualification or licensing
is necessary because of the property and assets owned, leased or operated by it
or because of the nature of its business as now being conducted, except for any
failure to so qualify or be licensed or in good standing which, individually or
in the aggregate, would not reasonably be expected to have a Company Material
Adverse Effect. Section 3.1 of the Disclosure Schedule lists the jurisdictions
of incorporation and foreign qualifications of the Company and each of its
Subsidiaries. The Company has made available to Buyer true, complete and correct
copies of the constitutive documents of each of the Company and its
Subsidiaries, in each case as amended to the date of this Agreement, and has
made available to Buyer each such entity's minute books and stock records.
Neither the Company nor any of its Subsidiaries is in violation of any provision
of its respective certificate of incorporation, by-laws or similar constitutive
document. Section 3.1 of the Disclosure Schedule contains a true and correct
list of the directors and officers of each of the Company and its Subsidiaries
as of the date of this Agreement.
SECTION 3.2 Authority; Approvals.
(a) The execution, delivery and performance of this Agreement by
the Company and the consummation of the transactions contemplated
hereby are within its
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corporate powers and authority and have been duly and validly
authorized by all necessary corporate action on the part of the Company
(other than the adoption of this Agreement by the Required Company
Stockholders). This Agreement has been duly and validly executed and
delivered by the Company, and (assuming due authorization, execution
and delivery by Buyer and Merger Sub) constitutes the valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium and other similar
laws of general applicability relating to or affecting creditor's
rights generally and by the application of general principles of
equity.
(b) The Board of Directors of the Company (the "Company Board")
has unanimously (i) determined that this Agreement and the Merger are
fair to, and in the best interests of, the Company and its
stockholders, (ii) resolved that the Merger is fair to, and in the
bests interests of, the Company and its stockholders and declared this
Agreement and the Merger to be advisable, (iii) resolved to approve
this Agreement and (iv) resolved to recommend that the Company's
stockholders adopt this Agreement, and, as of the date hereof, none of
the aforesaid actions by the Board of Directors of the Company has been
amended, rescinded or modified.
(c) The affirmative vote of the holders of a majority of
outstanding shares of Common Stock (the "Required Company
Stockholders") is the only vote of the holders of any class or series
of the Company's capital stock necessary to approve the Merger.
SECTION 3.3 Capitalization; Equity Interests.
(a) The authorized capital stock of the Company consists of
1,000,000,000 shares of Common Stock and 50,000,000 shares of preferred
stock, par value $0.001 per share (the "Preferred Stock"). As of the
date of this Agreement, (i) 93,703,445 shares of Common Stock,
including the associated Rights, were issued and outstanding (of which
1,629,076 are shares of Restricted Stock), (ii) 29,021 shares of Common
Stock are held in the treasury of the Company, (iii) no shares of
Common Stock are held by Subsidiaries of the Company and (iv) no shares
of Preferred Stock are outstanding.
(b) Section 3.3(b) of the Disclosure Schedule sets forth a true
and correct list of all of the Company's Subsidiaries, together with
their respective authorized capital stock, number of shares issued and
outstanding and record ownership of such shares. Except as set forth in
Section 3.3(b) of the Disclosure Schedule, the Company does not have
any Subsidiaries or own or hold, directly or indirectly, any equity or
other security interest, or has made any investment, in any other
Person. Except as set forth in Section 3.3(b) of the Disclosure
Schedule, all issued and outstanding shares of capital stock of the
Company's Subsidiaries have been duly authorized, were validly issued,
are fully paid and nonassessable and subject to no preemptive rights
and are directly or indirectly owned beneficially and of record by the
Company, free and clear of all Encumbrances, and free of any other
limitation or restriction (including any restriction on the right to
vote, sell or otherwise dispose of such capital stock).
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(c) Except for (i) issued and outstanding Common Stock referenced
in Sections 3.3(a)(i) and 3.3(a)(ii), (ii) 20,129,457 shares of Common
Stock reserved for issuance upon exercise of Options granted under the
Option Plans, as described in Section 3.3(d) of the Disclosure
Schedule, (iii) 5,992,124 shares of Common Stock reserved for issuance
upon exercise of the Warrants, as described in Section 3.3(e) of the
Disclosure Schedule, (iv) 100,000 shares of Preferred Stock designated
as "Series A Preferred Stock" reserved for issuance in accordance with
the Rights Agreement, and (v) as set forth in Sections 3.3(b) and (c)
of the Disclosure Schedule, at the time of execution of this Agreement,
no shares of capital stock or other voting securities of the Company or
any of its Subsidiaries are issued, reserved for issuance or
outstanding. All outstanding shares of capital stock of the Company
have been duly authorized, were validly issued, are fully paid and
nonassessable and subject to no preemptive rights. Except for the
Common Stock, or as set forth in Section 3.3(b) of the Disclosure
Schedule, there are no bonds, debentures, notes or other indebtedness
or securities of the Company or any of its Subsidiaries having the
right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which stockholders of the
Company or such Subsidiary may vote. Except for the Options, Warrants,
Restricted Stock and Rights or as otherwise set forth in Section 3.3(c)
of the Disclosure Schedule, there are no securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of
any kind to which the Company or any of its Subsidiaries is a party
relating to the issued or unissued capital stock of the Company or any
Subsidiary. Except for the Options, Warrants, Restricted Stock and
Rights or as otherwise set forth in Section 3.3(c) of the Disclosure
Schedule, there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to
which the Company or any of its Subsidiaries is a party or by which any
such Person is bound obligating such Person to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of capital
stock or other voting securities of the Company or any of its
Subsidiaries or obligating such Person to issue, grant, extend or enter
into any such security, option, warrant, call right, commitment,
agreement, arrangement or undertaking. Except as set forth in Section
3.3(c) of the Disclosure Schedule, there are no outstanding rights,
commitments, agreements, arrangements or undertakings of any kind
obligating the Company or any of its Subsidiaries to repurchase, redeem
or otherwise acquire any shares of capital stock or other voting
securities of the Company or any of its Subsidiaries or any securities
of the type described in this Section 3.3(c).
(d) The names of the optionee of each Option, the date of grant
of each Option, the number of shares subject to each such Option, the
expiration date of each such Option, and the price at which each such
Option may be exercised under the Option Plans are set forth in Section
3.3(d) of the Disclosure Schedule.
(e) The name of each holder of Warrants as of the date hereof,
the date of issuance of each Warrant, the number of shares subject to
each such Warrant, the expiration date of each such Warrant, and the
price at which each such Warrant may be exercised, are set forth in
Section 3.3(e) of the Disclosure Schedule.
SECTION 3.4 Conflicts; Consents.
9
(a) Except as set forth in Section 3.4 of the Disclosure
Schedule, the execution, delivery and performance by the Company of
this Agreement and the consummation of the transactions contemplated
hereby, and compliance by the Company with the terms and provisions
hereof, do not and will not (i) conflict with or result in a breach of
the certificates of incorporation, by-laws or other constitutive
documents of the Company or any of its Subsidiaries, (ii) violate,
conflict with, breach, result in the loss of any benefit, constitute a
default (or an event which, with or without notice or lapse of time, or
both, would constitute a default), or give rise to any right of
termination, cancellation or acceleration, under any of the provisions
of any note, bond, lease, mortgage, indenture, or any license,
franchise, permit, agreement or other instrument or obligation to which
any of the Company or its Subsidiaries is a party, or by which any such
Person or its properties or assets are bound, which in any case may
result in any loss (including loss of current or future benefits) or
other liability to the Company or its Subsidiaries exceeding $500,000
individually or $1,500,000 in the aggregate, (iii) violate any Laws
applicable to the Company or any of its Subsidiaries or any such
Person's properties or assets, which in any case may result in the
imposition of any fees, penalties or other liability to the Company or
its Subsidiaries in an amount exceeding $100,000 individually or
$400,000 in the aggregate or (iv) result in the creation or imposition
of any Encumbrance upon any property or assets used or held by the
Company or any of its Subsidiaries in an amount exceeding $500,000
individually or $1,500,000 in the aggregate.
(b) Except for (1) the filing of a premerger notification and
report form under the Xxxx-Xxxxx-Xxxxxx Act of 1976, as amended, and
the rules and regulations promulgated thereunder (the "HSR Act") and
the expiration or early termination of the applicable waiting period
thereunder, (2) any filings as may be required under the DGCL or the
Exchange Act in connection with the Merger, (3) any consent or approval
of or registration or filing with the Federal Communications Commission
("FCC"), any state public service or public utilities commission, or
similar state regulatory agency or body that regulates the business of
the Company or any of its Subsidiaries (each, a "State PUC"), (4) any
municipal franchising authority (each, a "Municipal Franchising
Authority") having regulatory authority over the business of the
Company and its Subsidiaries as conducted in any given jurisdiction,
and (5) where the failure to obtain such consents or approvals, or to
make such notifications, registrations or filings, would not result in
the imposition of fees or penalties on the Company or any of its
Subsidiaries, or otherwise result in any liability or other loss
(including loss of current or future benefits) in an amount in excess
of $100,000 individually or $400,000 in the aggregate, no consent or
approval by, or notification of or registration or filing with, any
Governmental Entity is required in connection with the execution,
delivery and performance by the Company of this Agreement or the
consummation of the transactions contemplated hereby.
SECTION 3.5 Financial Information and SEC Reports; Undisclosed
Liabilities.
(a) The Company has timely filed with the Securities and Exchange
Commission (the "SEC") and made available to Buyer all forms, reports,
schedules, statements and other documents required to be filed by it
since January 1, 2003 (together
10
with all exhibits and schedules thereto and all information
incorporated therein by reference, the "Company SEC Reports"). The
Company SEC Reports, as of the date filed with the SEC (and, in the
case of registration statements and proxy statements, on the dates of
effectiveness and the dates of mailing, respectively, and, in the case
of any Company SEC Report amended or superseded by a filing prior to
the date of this Agreement, then on the date of such amending or
superseding filing), (i) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading and
(ii) complied in all material respects with the applicable requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
and the Securities Act, as the case may be, and the applicable rules
and regulations of the SEC thereunder. None of the Company's
Subsidiaries is subject to the periodic reporting requirements of the
Exchange Act or required to file any form, report or other document
with the SEC, the Nasdaq Stock Market, Inc.'s National Market or any
national stock exchange. The Company has made available to Buyer true,
correct and complete copies of all correspondence with the SEC
occurring since January 1, 2003 and prior to the date hereof and will,
promptly following the receipt thereof, make available to Buyer any
such correspondence sent or received after the date hereof. To the
Company's knowledge, as of the date hereof none of the Company SEC
Reports is the subject of ongoing SEC review.
(b) The consolidated financial statements of the Company included
or incorporated by reference in the Company SEC Reports, as of the date
filed with the SEC (and, in the case of registration statements and
proxy statements, on the dates of effectiveness and the dates of
mailing, respectively, and, in the case of any Company SEC Reports
amended or superseded by a filing prior to the date of this Agreement,
then on the date of such amending or superseding filing), complied with
applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, were prepared in
accordance with GAAP applied on a consistent basis during the periods
indicated (except as may be indicated in the notes thereto or, in the
case of unaudited statements, as permitted by Form 10-Q of the SEC),
and fairly presented, in all material respects (subject, in the case of
the unaudited statements, to normal, recurring audit adjustments not
material in amount), the consolidated financial position of the Company
and its consolidated Subsidiaries as of the date of such financial
statements and the consolidated results of their operations and cash
flows for each of the periods then ended. The books and records of the
Company and its Subsidiaries have been, and are being, maintained in
accordance with GAAP and all other applicable legal and accounting
requirements and reflect only actual transactions.
(c) Except as reflected in the consolidated balance sheet of the
Company and its Subsidiaries at December 31, 2005, which balance sheet
was filed with the SEC by the Company on March 1, 2006 in its 2005
Annual Report on Form 10-K and made available to Buyer, the Company and
its Subsidiaries do not have, and as a result of the transactions
contemplated by this Agreement, will not have, any liabilities or
obligations (whether absolute, accrued, contingent or otherwise, and
whether due or to become due), except for liabilities and obligations
incurred in the ordinary course of business consistent
11
with past practice since December 31, 2005 which, individually or in
the aggregate, would not reasonably be expected to have a Company
Material Adverse Effect.
SECTION 3.6 Disclosure Documents. None of the information included or
incorporated by reference in the Proxy Statement (including any amendments or
supplements thereto) will, on the date the Proxy Statement is filed with the SEC
or on the date mailed to the Company's shareholders or at the time immediately
following any amendment or supplement to the Proxy Statement or at the time the
Company Stockholders' Meeting is held, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading; provided that the
Company makes no representations regarding any information furnished in writing
by Buyer or Merger Sub specifically for inclusion in the Proxy Statement.
SECTION 3.7 Absence of Changes. Except as set forth in Section 3.7 of
the Disclosure Schedule, since December 31, 2005, the Company and its
Subsidiaries have been operated in the ordinary course consistent with past
practice and there has not been (i) any Company Material Adverse Effect or (ii)
any action taken by the Company or its Subsidiaries that, if taken during the
period from the date of this Agreement through the Effective Time, would
constitute a breach of Section 5.1(b).
SECTION 3.8 Assets and Properties; Network.
(a) Section 3.8(a) of the Disclosure Schedule sets forth a true
and complete list of all real property owned or leased by the Company
or any of its Subsidiaries, including all collocation agreements to
which the Company or any of its Subsidiaries is a party. Except as set
forth in Section 3.8(a) of the Disclosure Schedule, each of the Company
and its Subsidiaries has good fee simple title to, or a valid leasehold
interest in, as applicable, all of its owned or leased real property,
including all such property interests identified in Section 3.8(a) of
the Disclosure Schedule (including all rights, title, privileges and
appurtenances pertaining or relating thereto) free and clear of any and
all Encumbrances, except for defects in title or failures to be in full
force and effect which, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect. All
leases, including all collocation agreements to which the Company or
any of its Subsidiaries is a party, in respect of real property leased
by the Company or any of its Subsidiaries are in full force and effect,
neither the Company nor any of its Subsidiaries has received any
written notice of a breach or default thereunder, and to the Company's
knowledge, no event has occurred that, with notice or lapse of time or
both, would constitute a breach or default thereunder, except for such
breach or default that, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect.
(b) Each of the Company and its Subsidiaries has good title to,
or a valid leasehold interest in, as applicable, all personal property
used in their respective businesses, except for defects in title or
failures to be in full force and effect which, individually or in the
aggregate, would not reasonably be expected to have a Company Material
Adverse Effect. Such personal property and the structural elements of
the
12
owned and leased property (taken as a whole) are in good operating
condition and repair, ordinary wear and tear and deferred maintenance
excepted, and except for such failures to be in good operating
condition and repair which, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect.
(c) Section 3.8(c) of the Disclosure Schedule sets forth the
following information relating to the network of the Company and its
Subsidiaries: (i) all switches and switch locations of the Company and
its Subsidiaries, (ii) all material inventory of the Company and its
Subsidiaries, (iii) a description of fibers and fiber miles owned or
leased by the Company and its Subsidiaries, (iv) for the ATM/IP
backbone of the Company and its Subsidiaries, route and circuit type,
(v) any pending asset sale of any of the foregoing and (vi) any
material agreement, arrangement or understanding with municipalities
governing access to municipal rights of way involving payments in
excess of $100,000 in any one year. The information provided in Section
3.8(c) of the Disclosure Schedule is accurate and complete in all
material respects; provided, however, that the operation of the network
of the Company and its Subsidiaries is subject to embedded software
owned by third parties and licensed to the Company or its Subsidiaries,
as to which (unless indicated otherwise in Section 3.8(c) of the
Disclosure Schedule) the Company has valid licenses as of the date
hereof. The Company shall provide Buyer with correct and complete
copies of all leases with respect to the network of the Company and its
Subsidiaries. Each of the network facilities described in Section
3.8(c) of the Disclosure Schedule is in good operating condition and
repair, ordinary wear and tear and deferred maintenance excepted, and
except for such failures to be in good operating condition and repair
which, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect.
SECTION 3.9 Other Agreements.
(a) Section 3.9(a) of the Disclosure Schedule sets forth a true,
correct and complete list, as of the date of this Agreement, of each
contract, agreement, commitment or lease of the Company and its
Subsidiaries currently in effect (i) which by its terms is a "material
contract" (as such term is defined in Item 601(b)(10) of Regulation S-K
of the SEC), (ii) that materially restricts the conduct of any material
line of business by the Company or any of its Subsidiaries, or the
ability of any such Person to operate in any geographic area, (iii)
relating to the borrowing of money or any guarantee in respect of any
indebtedness in excess of $100,000 of any Person (other than any
guarantee made by the Company in respect of any real property or
personal property leased by any Subsidiary), (iv) that extends "most
favored nations" or similar pricing to the counterparty to such
contract and such contract involving aggregate payments in excess of
$100,000 per year, (v) with respect to employment of an officer or
director, (vi) with respect to engagement of a consultant involving
payments of more than $100,000 in any one year, or (vii) that restricts
the ability of the Company or any of its Subsidiaries to consummate the
transactions contemplated hereby on a timely basis. In addition,
Section 3.9(a) of the Disclosure Schedule sets forth a true, correct
and complete list, as of the date of this Agreement, of each
interconnection agreement to which the Company or any of its
Subsidiaries is a party. Each contract, agreement, commitment or lease
of the type described in this Section 3.9(a), whether or not set forth
in Section 3.9(a) of the
13
Disclosure Schedule, is referred to herein as a "Material Contract".
True, correct and complete copies of all Material Contracts have
previously been made available to Buyer.
(b) All of the Material Contracts are in full force and effect,
except where the failure to be in full force and effect, individually
or in the aggregate, would not reasonably be expected to have a Company
Material Adverse Effect, and all are enforceable against the Company or
its applicable Subsidiary and, to the knowledge of the Company, the
other parties thereto in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general
applicability relating to or affecting creditor's rights generally and
by the application of general principles of equity. Neither the Company
nor any of its Subsidiaries nor, to the knowledge of the Company, any
other party to such Material Contracts is in breach of or default under
any obligation thereunder or has given notice of default to any other
party thereunder and, to the knowledge of the Company, no condition
exists that with notice or lapse of time or both would constitute a
default thereunder, in each case which breach or default, individually
or in the aggregate, would reasonably be expected to have a Company
Material Adverse Effect.
SECTION 3.10 Environmental Matters. Each of the Company and its
Subsidiaries holds all licenses, permits and other governmental authorizations
required under all applicable Environmental Laws, except for such licenses,
permits and other governmental authorizations the failure to hold which,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect. None of the Company or any of its Subsidiaries
is in violation of any requirements of any Environmental Laws in connection with
the conduct of its business or in connection with the use, maintenance or
operation of any real property owned or leased by the Company or any of its
Subsidiaries, except for violations which, individually or in the aggregate,
would not reasonably be expected to have a Company Material Adverse Effect. To
the Company's knowledge, there are no conditions relating to the Company or any
of its Subsidiaries or relating to any real property owned or leased by the
Company or any of its Subsidiaries currently or during the last five years that
in any such case would reasonably be expected to lead to any material liability
of the Company or any of its Subsidiaries under any Environmental Law.
SECTION 3.11 Litigation. Except as set forth in Section 3.11 of the
Disclosure Schedule, there are no actions, suits, proceedings, arbitrations,
claims or disputes pending or, to the knowledge of the Company, threatened by or
before any court, arbitration tribunal or other Governmental Entity against the
Company or any of its Subsidiaries which bring into question the validity of
this Agreement or that, individually or in the aggregate, would reasonably be
expected to have a Company Material Adverse Effect or prevent or materially
delay consummation of the Merger. No injunction, writ, temporary restraining
order, decree or any order of any nature has been issued by any court or other
Governmental Entity relating to the Company or any of its Subsidiaries or
seeking or purporting to enjoin or restrain the execution, delivery and
performance by the Company of this Agreement or the consummation by the Company
of the transactions contemplated hereby. Neither the Company nor any of its
Subsidiaries has received any written notice of any condemnation or eminent
domain proceeding affecting any owned or leased real property, and, to the
knowledge of the Company, no such action or proceeding has been threatened.
14
SECTION 3.12 Compliance; Licenses and Permits.
(a) Except as set forth in Section 3.12(a) of the Disclosure
Schedule, each of the Company and its Subsidiaries is in compliance
with all Laws applicable to the Company, any of its Subsidiaries or
their respective businesses (including without limitation, (i) the
Communications Act of 1934, as amended, and the communications-related
statutes of each state in which the Company or any of its Subsidiaries
operates; (ii) the rules, regulations, orders, and policies of the FCC
and State PUCs, (iii) any and all Universal Service Fund obligations,
and (iv) the Communications Assistance to Law Enforcement Act), except
for failures to comply which, individually or in the aggregate, would
not reasonably be expected to have a Company Material Adverse Effect.
(b) Each of the Company and its Subsidiaries holds all federal,
state, local and foreign governmental approvals, authorizations,
certificates, filings, franchises, licenses, notices, permits and
rights (collectively, "Permits," a true, correct and complete list of
which is contained in Section 3.12(b) of the Disclosure Schedule) that
are necessary to conduct their respective businesses as presently being
conducted, except for such Permits the failure to hold which,
individually or in the aggregate, would not reasonably be expected to
have a Company Material Adverse Effect. Except as set forth in Section
3.12(b) of the Disclosure Schedule, (i) such Permits are in full force
and effect, (ii) no material violations are or have been alleged in
respect of any thereof, (iii) no proceeding is pending or, to the
knowledge of the Company, threatened, against the Company or any of its
Subsidiaries in connection with the right to operate under the Permits,
or that could reasonably result in any fines, penalties or other losses
in excess of $50,000 individually or $250,000 in the aggregate, and
(iv) the consummation of the Merger and the transactions contemplated
by this Agreement will not result in the non-renewal, revocation or
termination of any such Permit.
(c) The Company and its Subsidiaries are the authorized legal
holders or otherwise have rights to all Permits issued by the FCC,
State PUCs or any other Governmental Entity that regulates
telecommunications in each applicable jurisdiction held by the Company
or its Subsidiaries (collectively, "Communications Licenses," a true,
correct and complete list of which is contained in Section 3.12(c) of
the Disclosure Schedule), and the Communications Licenses constitute
all of the licenses from the FCC, the State PUCs or any other
Governmental Entity that regulates telecommunications in each
applicable jurisdiction that are necessary or required for the
operation of the businesses of the Company and its Subsidiaries as now
conducted other than any such licenses from any Municipal Franchising
Authority the absence of which would not result in any fines, penalties
or other losses in excess of $50,000 individually or $250,000, in the
aggregate. All the Communications Licenses were duly obtained and are
valid and in full force and effect, unimpaired by any material
condition, except those conditions that may be contained within the
terms of such Communications Licenses. As of the date of this
Agreement, no action by or before the FCC, any State PUC or any other
Governmental Entity that regulates telecommunications in each
applicable jurisdiction is pending or, to the knowledge of the Company,
threatened in which the requested remedy is (i) the revocation,
suspension, cancellation, rescission or modification or refusal to
renew any of the Communications Licenses, or (ii) material fines and/or
forfeitures. As
15
of the date of this Agreement, the Universal Service Administration
Company has not initiated any inquiries, audits or other proceedings
against the Company or its Subsidiaries and, to the knowledge of the
Company, no such actions are threatened which, in each case, could
result in fines, penalties or other losses in excess of $50,000
individually or $250,000, in the aggregate, if not cured or otherwise
responded to in the ordinary course of business.
(d) The Company and each of its officers and directors are in
compliance with, and have complied, in all material respects with (i)
the applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002 and the
related rules and regulations promulgated under such Act (the
"Xxxxxxxx-Xxxxx Act") or the Exchange Act and (ii) the applicable
listing and corporate governance rules and regulations of the American
Stock Exchange. There are no outstanding loans made by the Company or
any of its Subsidiaries to any executive officer (as defined in Rule
3b-7 under the Exchange Act) or director of the Company. Since the
enactment of the Xxxxxxxx-Xxxxx Act, neither the Company nor any of its
Subsidiaries has made any loans to any executive officer or director of
the Company or any of its Subsidiaries. The Company has established and
maintains disclosure controls and procedures (as such term is defined
in Rule 13a-15(e) under the Exchange Act) and such disclosure controls
and procedures are designed to ensure that all material information
relating to the Company, including its consolidated Subsidiaries, is
made known on a timely basis to the Company's principal executive
officer and its principal financial officer by others within those
entities. The Company's principal executive officer and its principal
financial officer have disclosed, based on their most recent
evaluation, to the Company's auditors and the audit committee of the
Board of Directors of the Company (i) all significant deficiencies in
the design or operation of internal controls over financial reporting
which are reasonably likely to adversely affect in any material respect
the Company's ability to record, process, summarize and report
financial data and have identified for the Company's auditors any
material weaknesses in internal controls over financial reporting and
(ii) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's internal
controls over financial reporting. For purposes of this paragraph,
"principal executive officer" and "principal financial officer" shall
have the meanings given to such terms in the Xxxxxxxx-Xxxxx Act.
SECTION 3.13 Intellectual Property.
(a) Section 3.13(a)(1) of the Disclosure Schedule sets forth an
accurate and complete list of all registered Marks owned (in whole or
in part) by the Company or any of its Subsidiaries (collectively
"Company Registered Marks"), Section 3.13(a)(2) of the Disclosure
Schedule sets forth an accurate and complete list of all registered
Patents or pending applications for registered Patents owned (in whole
or in part) by the Company or any of its Subsidiaries (collectively the
"Company Registered Patents") and Section 3.13(a)(3) of the Disclosure
Schedule sets forth an accurate and complete list of all registered
Copyrights owned (in whole or in part) by the Company or any of its
Subsidiaries, and all pending applications for registration of
Copyrights filed anywhere in the world that are owned (in whole or in
part) by the Company or any of its Subsidiaries (collectively the
"Company Registered Copyrights" and, together with the Company
16
Registered Marks and the Company Registered Patents, the "Company
Registered IP"). Except as set forth on Section 3.13(a)(4) of the
Disclosure Schedule, no Company Registered IP has been or is now
involved in any interference, reissue, reexamination, opposition,
cancellation or similar proceeding and, to the knowledge of the
Company, no such action is or has been threatened in writing with
respect to any of the Company Registered IP. To the knowledge of the
Company, the Company Registered IP is valid, subsisting and
enforceable, and neither the Company nor any of its Subsidiaries has
received any written notice or claim challenging or questioning the
validity or enforceability or alleging the misuse of any of the Company
Registered IP. Except as may be set forth in Section 3.13(a)(5) of the
Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries has taken any action or failed to take any action, which
action or failure reasonably could be expected to result in the
abandonment, cancellation, forfeiture, relinquishment, invalidation or
unenforceability of any of the Company Registered IP except for such
actions or failures which, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect.
(b) Each of the Company and its Subsidiaries has taken all
reasonable steps to maintain the confidentiality of all information
that constitutes a material Trade Secret of the Company or any of its
Subsidiaries. Without limiting the generality of the foregoing, all
current and former employees, consultants and contractors of the
Company or any of its Subsidiaries who have participated in the
creation of any material Intellectual Property that is used by the
Company or any of its Subsidiaries in the conduct of their respective
businesses have entered into proprietary information, confidentiality
and assignment agreements with the Company that are substantially in
the Company's standard forms (which have previously been provided to
Buyer).
(c) To the knowledge of the Company, the Company owns exclusively
all right, title and interest to the Company Registered IP and all
other material Intellectual Property used by the Company or any of its
Subsidiaries that is not licensed to the Company or any of its
Subsidiaries pursuant to a written license agreement, free and clear of
any Lien or other adverse claims or interests, and neither the Company
nor any of its Subsidiaries has received any written notice or claim
challenging the Company's or such Subsidiary's ownership of any of such
material Intellectual Property. None of such material Intellectual
Property owned by the Company or any of its Subsidiaries is subject
to any outstanding order, judgment, or stipulation restricting the use
thereof by the Company or such Subsidiary.
(d) Section 3.13(d)(1) of the Disclosure Schedule sets forth a
complete and accurate list of all material agreements granting to the
Company or any of its Subsidiaries any material right under or with
respect to any Intellectual Property owned by a third party that is
used in connection with the business of the Company or any such
Subsidiary other than commercially available standard Software
applications used in the Company's or any such Subsidiary's operations
(collectively, the "Inbound License Agreements"), indicating for each
the title and the parties thereto. Section 3.13(d)(2) of the Company
Disclosure Schedule sets forth a complete and accurate list of all
material license agreements under which the Company or any of its
Subsidiaries grants any rights under
17
any Intellectual Property, excluding non-exclusive licenses granted by
the Company or any of its Subsidiaries in the ordinary course of
business in substantially the Company's standard forms (which have
previously been provided to Buyer). No loss or expiration of any
material Intellectual Property licensed to the Company or any of its
Subsidiaries under any Inbound License Agreement is pending or, to the
knowledge of the Company, reasonably foreseeable or, to the knowledge
of the Company, threatened in writing. There is no outstanding or, to
the Company's knowledge, threatened (in writing) dispute or
disagreement with respect to any Inbound License Agreement or any
license agreements under which the Company or any of its Subsidiaries
grants any rights under any Intellectual Property (collectively, the
"Outbound License Agreements") that could materially affect any of the
respective rights and obligations of the parties thereunder. The
execution, delivery and performance by the Company of this Agreement,
and the consummation of the transactions contemplated hereby, will not
result in the loss or impairment of, or give rise to any right of any
third party to terminate or reprice or otherwise modify any of the
Company's or any of its Subsidiaries' rights or obligations under any
Inbound License Agreement or any Outbound License Agreement, except for
such losses, impairments or rights to terminate, reprice or otherwise
modify, which would not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect.
(e) To the knowledge of the Company, the Intellectual Property
owned by the Company or any of its Subsidiaries or licensed under the
Inbound License Agreements to the Company or any of its Subsidiaries
constitutes all the material Intellectual Property rights necessary for
the conduct of the businesses of the Company and its Subsidiaries as
each is currently conducted, excluding commercially available standard
Software applications used in the Company's or any such Subsidiary's
operations.
(f) Except as would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect,
none of the products or services distributed, sold or offered by the
Company or any of its Subsidiaries, nor any technology, content,
materials or other Intellectual Property used, displayed, published,
sold, distributed or otherwise commercially exploited by or for the
Company or any of its Subsidiaries has infringed upon, misappropriated,
or violated, or does infringe upon, misappropriate or violate any
Intellectual Property of any third party. Neither the Company nor any
of its Subsidiaries has received any written notice or claim asserting
that any such material infringement, misappropriation or violation is
occurring or has occurred. To the Company's Knowledge, no third party
is misappropriating or infringing any material Intellectual Property
owned by the Company or any of its Subsidiaries in any material
respect.
SECTION 3.14 Tax Matters. Except as set forth in Section 3.14 of the
Disclosure Schedule:
(a) Each of the Company and its Subsidiaries has timely filed
(taking into account applicable extensions) all material Tax Returns
required to be filed by it and paid all Taxes shown to be due on such
Tax Returns. All such Tax Returns are true, correct and complete in all
material respects. The Company and each of its Subsidiaries has
18
made adequate provision (or adequate provision has been made on its
behalf), in accordance with GAAP, for all accrued Taxes not yet due.
(b) The Company and its Subsidiaries have withheld and paid over
all material Taxes required to have been withheld and paid over, and
complied in all material respects with the rules and regulations
relating to the withholding or remittance of Taxes.
(c) There are no outstanding waivers or comparable consents that
have been given by the Company or any of its Subsidiaries regarding the
application of any statute of limitations with respect to any Taxes or
Tax Returns of the Company or any such Subsidiary. There are no audits,
administrative proceedings or court proceedings relating to Taxes or
Tax Returns of the Company or any Subsidiary currently pending, or, to
the knowledge of the Company, threatened in writing against the Company
or any of its Subsidiaries. There are no material Liens on any assets
of the Company or any Subsidiary with respect to Taxes, other than
Liens for Taxes not yet due and payable or for Taxes that the Company
or any of its Subsidiaries is contesting in good faith through
appropriate proceedings. To the knowledge of the Company, no written
claim has been made by a taxing authority in a jurisdiction where the
Company or any of its Subsidiaries has not filed a Tax Return that the
Company or such Subsidiary is required to file a Tax Return in such
jurisdiction.
(d) Neither the Company nor any of its Subsidiaries has been a
member of an affiliated group filing a consolidated federal income Tax
Return (other than a group the common parent of which was the Company)
or has any liability for the Taxes of any Person other than a member of
the Company Group under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local or foreign law) as a transferee or
successor.
(e) None of the Company or any of its Subsidiaries has engaged in
a "listed transaction" within the meaning of Treasury Regulation
Section 1.6011-4(b).
SECTION 3.15 Labor Relations; Employees.
(a) Except as set forth in Section 3.15(a) of the Disclosure
Schedule, as of the date hereof, to the knowledge of the Company: (i)
the Company is in compliance in all material respects with all
applicable Laws respecting employment and employment practices, terms
and conditions of employment, wages, hours or work and occupational
safety and health, and is not engaged in any act or practice which
constitutes or would reasonably be expected to constitute an unfair
labor practice as defined in the National Labor Relations Act or other
applicable Laws, (ii) there is no unfair labor practice charge or
complaint against the Company pending or threatened in writing before
the National Labor Relations Board or any similar state or foreign
agency, (iii) there is no material labor strike, dispute, slowdown,
stoppage or lockout pending, affecting or threatened in writing against
the Company, (iv) the Company is not a party to or bound by any
collective bargaining or similar agreement and (v) there are no union
organizing activities among the employees of the Company.
19
(b) Section 3.15(b) of the Disclosure Schedule contains a list of
each pension, profit-sharing or other retirement, bonus, employment or
termination agreement, deferred compensation, stock option, stock
appreciation, stock purchase, performance share, bonus or other
incentive, severance or termination pay, health, and group insurance
plan, program or arrangement, as well any other "employee benefit plan"
(within the meaning of Section 3(3) of ERISA) that the Company and its
Subsidiaries sponsor, maintain, or contribute to with respect to
employees of the Company and its Subsidiaries, or with respect to which
the Company or any Subsidiary has or may reasonably be expected to have
any liability, whether contingent or direct (each such plan, program or
arrangement being hereinafter referred to in this Agreement
individually as a "Plan").
(c) The Company has made available to Buyer or Buyer's counsel a
true and complete copy of each material Plan, all amendments thereto,
the most recent summary plan description or other written description
of the Plan, the most recent IRS determination letter (if any), and the
most recent annual report (if any) required to be filed in connection
with such Plan.
(d) Each Plan that is intended to be "qualified" within the
meaning of Section 401(a) of the Code has received a favorable
determination letter from the IRS that remains in effect on the date
hereof. No event has occurred since such favorable determination letter
was issued that could reasonably be expected to jeopardize the
tax-qualified status of such Plan.
(e) Except as set forth in Section 3.15(e) of the Disclosure
Schedule, all required contributions due with respect to any Plan have
been made as required under ERISA. The reserves reflected in the
Company Financials for the obligations of the Company under all Plans
were determined in accordance with GAAP.
(f) No Plan is subject to the provisions of Section 412 of the
Code, Part 3 of Subtitle B of Title I of ERISA, or Title IV of ERISA.
(g) No Plan constitutes a "multiemployer plan" (within the
meaning of Section 3(37) of ERISA), and, with respect to the Company,
neither the Company nor any of its ERISA Affiliates has, in the past
six years, contributed to or otherwise had any obligation or liability
in connection with any multiemployer plan (within the meaning of
Section 3(37) of ERISA).
(h) Neither the Company nor any of its ERISA Affiliates has
engaged in a "prohibited transaction" (within the meaning of Section
4975 of the Code or Section 406 of ERISA) that would reasonably be
expected to have a Company Material Adverse Effect with respect to any
Plan. To the knowledge of the Company, no "prohibited transaction"
(within the meaning of Section 4975 of the Code or Section 406 of
ERISA) that would reasonably be expected to have a Company Material
Adverse Effect has occurred with respect to any Plan.
(i) Each Plan has been operated in all material respects in
accordance with its terms and applicable Laws, and will continue to be
so operated until the Effective Time.
20
(j) Other than routine claims for benefits, to the knowledge of
the Company, there are no actions, claims, lawsuits or arbitrations
pending or threatened in writing with respect to any Plan.
(k) Except as set forth in Section 3.15(k) of the Disclosure
Schedule, the consummation of the transactions contemplated by this
Agreement, either standing alone or in combination with any subsequent
event, will not (A) result in any payment becoming due to any current
or former employee or director of the Company, (B) increase any
benefits otherwise payable under any Plan, or (C) result in the
acceleration of time of payment or vesting of any such benefits to any
extent.
(l) Except as set forth in Section 3.15(l) of the Disclosure
Schedule, no Plan provides welfare benefits after termination of
employment except to the extent required by Section 4980B of the Code.
(m) Except as set forth on Section 3.15(m) of the Disclosure
Schedule, no amount that could be received (whether in cash or property
or the vesting of property) in connection with the consummation of the
transactions contemplated by this Agreement by any employee, officer or
director of the Company who is a "disqualified individual" (as such
term is defined in Treasury Regulation Section 1.280G-1) under any Plan
or otherwise could be characterized as an "excess parachute payment"
(as defined in Section 280G(b)(1) of the Code).
SECTION 3.16 Transactions with Related Parties. Except as set forth in
Section 3.16 of the Disclosure Schedule, since January 1, 2005 and prior to the
date hereof, no event has occurred that would be required to be reported as a
Certain Relationship or Related Transaction pursuant to Item 404 of Regulation
S-K promulgated by the SEC.
SECTION 3.17 Brokers. No agent, broker, investment banker, Person or
firm acting on behalf of the Company or any of its Subsidiaries or under the
authority of the Company or any of its Subsidiaries, other than Xxxxxx Xxxxxxx &
Co. Incorporated and Evercore Group L.L.C., the fees and expenses of which will
be paid by the Company (as reflected in the agreements between such firms and
the Company, copies of which have been delivered to Buyer), is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
directly or indirectly from any of the parties hereto in connection with any of
the transactions contemplated hereby.
SECTION 3.18 Insurance. Section 3.18 of the Disclosure Schedule
contains a list of each material insurance policy maintained with respect to the
business of the Company and its Subsidiaries. Except as set forth on Section
3.18 of the Disclosure Schedule, neither the Company nor any of its Subsidiaries
is in material default with respect to its obligations under any material
insurance policy maintained by them. Neither the Company nor any of its
Subsidiaries has received written notice of termination, exhaustion of limits,
cancellation or non-renewal of any such insurance policies from any of its
insurance brokers or carriers. The Company has complied with each such insurance
policy except where the failure to so comply would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect, and
all material claims thereunder (i) have been filed in due and timely fashion,
21
and (ii) have been accepted by the insurer. There have been no denials or
reservations of rights of any such material claims.
SECTION 3.19 Suppliers. Except as set forth in Section 3.19 of the
Disclosure Schedule, as of the date of this Agreement, neither the Company nor
any of its Subsidiaries (a) has received any written notice of, or has any
reason to believe that there are, any outstanding or threatened dispute with any
supplier or vendor (including local and long distance carriers), which dispute
could reasonably involve the payment by or to the Company or any Subsidiaries of
an amount exceeding $100,000 individually or $250,000 in the aggregate, or (b)
has any reason to believe that there exist any reasonable grounds for any such
dispute.
SECTION 3.20 Takeover Statutes. Prior to the date of this Agreement,
the Board of Directors of the Company has taken all actions required to be taken
by it in order to exempt this Agreement, the Voting Agreements and the
transactions contemplated hereby and thereby from the provisions of Section 203
of the DGCL, and accordingly, that section does not apply to the Merger, the
Voting Agreements or any of the transactions contemplated hereby and thereby. No
other "control share acquisition," "fair price" or other anti-takeover
regulations enacted under state Laws in the United States apply to this
Agreement or the Voting Agreements or any of the transactions contemplated
hereby and thereby.
SECTION 3.21 Opinion of Financial Advisor. The Company has received the
opinion of Evercore Group L.L.C. that, as of the date hereof, the Common Stock
Consideration to be received by the holders of the Common Stock is fair, from a
financial point of view, to the holders of the Common Stock, and such opinion
has not been withdrawn or revoked or otherwise modified as of the date of this
Agreement.
SECTION 3.22 Rights Agreement. The Company has taken all action
necessary or appropriate under its Rights Agreement to ensure that the execution
of this Agreement and consummation of the transactions contemplated hereby,
including the Merger, do not and will not result in the ability of any person to
exercise any Rights or enable or require such Rights to separate from the shares
of Common Stock to which they are attached or to be triggered or become
exercisable.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
AND MERGER SUB
Buyer and Merger Sub jointly and severally represent and warrant to the
Company as follows:
SECTION 4.1 Organization; Standing and Power. Each of Buyer and Merger
Sub is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation and has all requisite corporate
power and authority to own, lease and operate its properties and assets and to
carry on its business as now being conducted. Buyer has made available to the
Company true, complete and correct copies of the constitutive documents of each
of Buyer and Merger Sub, in each case as amended to the date of this Agreement.
Each of Buyer and Merger Sub is duly licensed or qualified to do business and is
in
22
good standing in each jurisdiction in which such qualification or licensing is
necessary because of the property and assets owned, leased or operated by it or
because of the nature of its business as now being conducted, except for any
failure to so qualify or be licensed or in good standing which, individually or
in the aggregate, would not reasonably be expected to prevent or materially
delay consummation of the Merger.
SECTION 4.2 Authority; Approvals. The execution, delivery and
performance of this Agreement by each of Buyer and Merger Sub and the
consummation of the transactions contemplated hereby are within their respective
corporate power and authority have been duly and validly authorized by all
necessary corporate action on the part of each of Buyer and Merger Sub. This
Agreement has been duly and validly executed and delivered by Buyer and Merger
Sub, and (assuming due authorization, execution and delivery by the Company)
constitutes the valid and binding obligation of each of Buyer and Merger Sub,
enforceable against each of Buyer and Merger Sub in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditor's rights generally and by the application of
general principles of equity.
SECTION 4.3 Conflicts; Consents.
(a) The execution, delivery and performance by each of Buyer and
Merger Sub of this Agreement and the consummation of the transactions
contemplated hereby, and compliance by Buyer and Merger Sub with the
terms and provisions hereof, does not and will not (i) conflict with or
result in a breach of the certificates of incorporation, by-laws or
other constitutive documents of Buyer or Merger Sub, (ii) violate,
conflict with, breach, result in the loss of any benefit, constitute a
default (or an event which, with or without notice or lapse of time, or
both, would constitute a default), or give rise to any right of
termination, cancellation or acceleration, under any of the provisions
of any note, bond, lease, mortgage, indenture, or any license,
franchise, permit, agreement or other instrument or obligation to which
any of Buyer or Merger Sub is a party, or by which any such Person or
its properties or assets are bound or (iii) violate any Laws applicable
to Buyer or Merger Sub or any such Person's properties or assets,
except where the occurrence of any of the foregoing described in
clauses (ii) or (iii) above, individually or in the aggregate, would
not reasonably be expected to prevent or materially delay the
consummation of the Merger.
(b) Except for (A) the filing of a premerger notification and
report form under the HSR Act and the expiration or early termination
of the applicable waiting period thereunder, (B) any filings as may be
required under the DGCL in connection with the Merger, (C) any consent
or approval of or registration or filing with the FCC, any State PUC
and any Municipal Franchising Authority having regulatory authority
over the business of the Company and its Subsidiaries as conducted in
any given jurisdiction, and (D) such consents, approvals,
notifications, registrations or filings the failure to obtain which,
individually or in the aggregate, would not reasonably be expected to
prevent or materially delay consummation of the Merger, no consent or
approval by, or notification of or registration or filing with, any
Governmental Entity is required in connection with
23
the execution, delivery and performance by Buyer or Merger Sub of this
Agreement or the consummation of the transactions contemplated hereby.
SECTION 4.4 Disclosure Documents. None of the information supplied or
to be supplied by Buyer or Merger Sub for inclusion or incorporation by
reference in the Proxy Statement (including any amendments or supplements
thereto) will, on the date the Proxy Statement is filed with the SEC or mailed
to the Company's shareholders or at the time immediately following any amendment
or supplement to the Proxy Statement or at the time the Company Stockholders'
Meeting is held, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
SECTION 4.5 Brokers. Except for Xxxxx Brothers Xxxxxxxx & Co. and
Credit Suisse, no agent, broker, investment banker, person or firm acting on
behalf of Buyer or Merger Sub or under the authority of Buyer or Merger Sub is
or will be entitled to any broker's or finder's fee or any other commission or
similar fee directly or indirectly from any of the parties hereto in connection
with the Merger or any of the transactions contemplated hereby.
SECTION 4.6 Litigation. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Buyer, threatened against or
affecting, Buyer or Merger Sub or any of their respective properties which,
individually or in the aggregate, would reasonably be expected to impair the
ability of Buyer or Merger Sub to perform its obligations hereunder, or prevent
or materially delay the consummation of the Merger.
SECTION 4.7 Operations of Merger Sub. Merger Sub is a wholly owned
subsidiary of Buyer, was formed solely for the purpose of engaging in the
transactions contemplated hereby, has engaged in no other business activities
and has conducted its operations only as contemplated by this Agreement.
SECTION 4.8 Financing. Buyer has, or shall have at the Closing and at
the Effective Time, sufficient funds available to permit Buyer to perform all of
its obligations under this Agreement and to consummate all of the transactions
contemplated hereby. Buyer has received an executed commitment letter (the
"Commitment Letter") from Credit Suisse Securities (USA) LLC and Credit Suisse,
pursuant to which Credit Suisse has committed to provide Buyer and certain
existing or future subsidiaries of the Company with a credit facility in an
aggregate amount of $314,000,000 (the "Financing") for the purpose of
consummating the transactions contemplated hereby and other general corporate
purposes. The Financing is adequate to pay in full in cash the aggregate Common
Stock Consideration, the aggregate Warrant Cancellation Payment and the
aggregate Option Cancellation Payment (in each case in accordance with the terms
of this Agreement), together with all fees and expenses of Buyer and Merger Sub
associated with the transactions contemplated hereby, and to make any other
payments necessary to consummate the transactions contemplated hereby. Buyer has
delivered a true and complete copy of the Commitment Letter to the Company prior
to the date hereof. The Commitment Letter, in the form so delivered, is valid
and in full force and effect as of the date hereof. No event has occurred which,
with or without notice, lapse of time or both, would constitute a default on the
part of Buyer under the Commitment Letter. Buyer has fully paid any and all
24
commitment fees or other fees required by the Commitment Letter to be paid as of
the date hereof.
ARTICLE V
CERTAIN COVENANTS
SECTION 5.1 Conduct of Business.
(a) From the date of this Agreement until the Closing, except as
set forth on Section 5.1 of the Disclosure Schedule, as expressly
permitted or required by this Agreement, as required by applicable Law
or as otherwise consented to by Buyer in writing, the Company shall,
and shall cause each of its Subsidiaries to, operate its business only
in the ordinary course of business consistent with past practice and in
compliance in all material respects with all applicable Laws, including
the Communications Act of 1934, as amended, and the
communications-related statutes of each state in which the Company or
any of its Subsidiaries operates, and the implementing rules,
regulations, orders, and policies of the FCC and each State PUC, and
shall use its commercially reasonable efforts to:
(i) Preserve intact the present organization of the Company
and its Subsidiaries;
(ii) keep available the services of the present officers
and employees of the Company and its Subsidiaries;
(iii) preserve the Company's and its Subsidiaries' goodwill
and relationships with customers, suppliers, licensors,
licensees, contractors, lenders and other Persons having
significant business dealings with the Company and its
Subsidiaries;
(iv) continue all current sales, marketing and other
promotional policies, programs and activities of the Company and
its Subsidiaries;
(v) maintain the assets of the Company and its Subsidiaries
in good repair, order and condition; and
(vi) maintain the Company's and its Subsidiaries' insurance
policies and risk management programs, and in the event of
casualty, loss or damage to any assets of the Company or any of
its Subsidiaries, repair or replace such assets with assets of
comparable quality, as the case may be.
(b) Without limiting the generality of the foregoing, except as
set forth on Section 5.1 of the Disclosure Schedule, as expressly
permitted or required by this Agreement or as required by applicable
Law, the Company shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of Buyer, directly
or indirectly:
25
(i) cause or knowingly permit any act, event or change
which would reasonably be expected to have a Company Material
Adverse Effect;
(ii) (A) incur any indebtedness for borrowed money other
than borrowing under the Company's existing credit facility in
the ordinary course of business, or (B) assume, guarantee,
endorse or otherwise as an accommodation become responsible for
the obligations of any Person;
(iii) amend or otherwise change its certificate of
incorporation or by-laws or equivalent organizational documents;
(iv) declare, set aside or pay any dividend or other
distribution with respect to any shares of capital stock of the
Company or any of its Subsidiaries, other than dividends from one
Company Subsidiary to another Company Subsidiary or to the
Company;
(v) (A) split, combine or reclassify any shares of its
capital stock, or issue or authorize or propose the issuance of
any other securities in respect of, in lieu of or in substitution
for shares of its capital stock; (B) repurchase, redeem or
otherwise acquire any shares of the capital stock of the Company
or any of its Subsidiaries, or any securities convertible into or
exercisable for any shares of the capital stock of the Company or
any of its Subsidiaries; or (C) issue or sell, or enter into any
contract for the issuance or sale, of any shares of capital stock
or securities convertible into or exercisable for shares of
capital stock of the Company or any of its Subsidiaries (other
than the issuance of shares of Common Stock upon the exercise of
Warrants or Options outstanding on the date hereof in accordance
with their terms in existence as of the date of this Agreement);
(vi) sell, assign, pledge, encumber, transfer or otherwise
dispose of any material asset of the Company or any of its
Subsidiaries;
(vii) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in
any person or any assets, other than acquisitions of inventory,
equipment and supplies in the ordinary course of business;
(viii) incur any capital expenditures or commitments or
additions to property, plant or equipment of the Company and its
Subsidiaries (including IT Expenditures), except for any such
capital expenditures or commitments or additions that (a) are set
forth in the Company's capital expenditure plan set forth in
Section 5.1(b)(viii) of the Disclosure Schedule, or (b) are not
in excess of $800,000 in the aggregate (except, in the case of
clauses (a) and (b), as otherwise noted in Section 5.1(b)(viii)
of the Disclosure Schedule);
(ix) (I) except in each case for regular annual increases
or promotions in the ordinary course of business (A) increase the
compensation of employees of the Company or any of its
Subsidiaries (including any increase pursuant to any written
bonus, pension, profit-sharing or other benefit or compensation
plan,
26
policy or arrangement or commitment) or (B) increase any such
compensation or bonus payable to any officer, stockholder,
director, consultant or agent of the Company or any of its
Subsidiaries having an annual salary or remuneration in excess of
$100,000, or (II) take any action reasonably within its control
to materially increase or decrease the total number of employees
of the Company and its Subsidiaries in any functioning department
of the Company and its Subsidiaries; provided, however, that,
immediately prior to the Effective Time, the Company may, in its
sole discretion, pay the bonuses described in Section 5.1(b) of
the Disclosure Schedule;
(x) change the independent public accountants of the
Company and its Subsidiaries or, except as required by GAAP or
applicable Law, change the accounting methods or accounting
practices followed by the Company;
(xi) make or change any material Tax election, in each
case, other than in the ordinary course of business consistent
with past practice or as required by Law, incur any material
liability for Taxes other than in the ordinary course of business
or file any amended Tax Return (other than a Tax Return filed in
connection with or required by the resolution of any Tax audit or
proceeding);
(xii) enter into, amend, modify or consent to the
termination of, or fail to perform any obligation under, any
Material Contract, or amend, waive, modify or consent to the
termination of the Company's or any Subsidiary's material rights
with respect to any such Material Contract;
(xiii) commence or settle any material action, suit,
proceeding, claim or dispute pending or threatened by or before
any court, arbitration tribunal or other Governmental Entity;
(xiv) enter into any new line of business;
(xv) take any action that will create a requirement to make
a filing, registration or application with, or seek the waiver,
consent or approval of, the FCC, any State PUC or any other
Governmental Entity other than in the ordinary course of the
operation of the business, or discontinue or withdraw any
authorized service or voluntary relinquish any Permits or
Communications Licenses; or
(xvi) take or agree in writing or otherwise take any of the
actions described in (i) through (xv) above or any other action
which would reasonably be expected to delay or prevent the
satisfaction of any condition to closing set forth in Article VI.
SECTION 5.2 Access and Information; Confidentiality.
(a) From the date of this Agreement until the earlier of (i) the
Closing and (ii) the termination of this Agreement in accordance with
Article VII, the Company shall allow Buyer and its financing parties
and their respective representatives to make such reasonable
investigation of the business, operations and properties of the Company
and
27
its Subsidiaries as Buyer deems reasonably necessary in connection with
the transactions contemplated by this Agreement. Such investigation
shall include reasonable access to the respective directors, officers,
employees, agents and representatives (including legal counsel and
independent accountants) of the Company and its Subsidiaries and their
respective properties, books, records and commitments. The Company
shall promptly furnish Buyer and its representatives with such
financial, operating and other data and information and copies of
documents with respect to the Company and its Subsidiaries or any of
the transactions contemplated by this Agreement as Buyer shall from
time to time reasonably request. All access and investigation pursuant
to this Section 5.2 shall occur only upon reasonable notice and during
normal business hours and shall be conducted at Buyer's expense and in
such a manner as not to interfere with the normal operations of the
business of the Company and its Subsidiaries. During the period prior
to the Closing Date, the Company shall provide Buyer consolidated
monthly balance sheets, statements of operations, stockholders' equity
and cash flow within fifteen calendar days after the end of each month.
(b) The parties hereto will hold any non-public information
regarding the other parties, their Subsidiaries and their respective
businesses in confidence in accordance with the terms of the
Confidentiality Agreement.
SECTION 5.3 Proxy Statement.
(a) As promptly as practicable after the execution of this
Agreement, but in no event later than twenty (20) days after the date
hereof, the Company and Buyer shall prepare and the Company shall cause
to be filed with the SEC a proxy statement (together with any
amendments thereof or supplements thereto, the "Proxy Statement"). The
Company will cause the Proxy Statement to comply as to form in all
material respects with the applicable provisions of the Exchange Act
and the rules and regulations promulgated thereunder. Each of Buyer and
the Company shall furnish all information concerning it as may
reasonably be requested by the other party in connection with the
preparation of the Proxy Statement. No amendment or supplement to the
Proxy Statement will be made by the Company without Buyer's prior
consent, which shall not be unreasonably delayed or withheld.
(b) The Company shall notify Buyer promptly after receipt by the
Company of any comments of the SEC on, or of any request by the SEC for
amendments or supplements to, the Proxy Statement. The Company shall
supply Buyer with copies of all correspondence between the Company or
any of its representatives and the SEC with respect to the Proxy
Statement. If at any time prior to the Effective Time, any event shall
occur relating to the Company or any of its Subsidiaries or any of
their respective officers, directors or Affiliates which should be
described in an amendment or supplement to the Proxy Statement, the
Company shall inform Buyer promptly after becoming aware of such event.
Whenever the Company learns of the occurrence of any event which should
be described in an amendment of, or supplement to, the Proxy Statement,
the parties shall cooperate to promptly cause such amendment or
supplement to be prepared, filed with and cleared by the SEC and, if
required by applicable Law, disseminated to the persons and in the
manner required.
28
SECTION 5.4 Company Stockholders' Meeting. The Company shall, as
promptly as practicable following the execution of this Agreement, establish a
record date for, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Company Stockholders' Meeting") for the purpose of voting
upon the adoption of this Agreement; provided that the Proxy Statement shall be
mailed to Company stockholders no later than ten (10) Business Days after the
SEC has indicated that it has no further comments to the Proxy Statement.
Subject to Sections 5.5(b), the Company shall, through its Board of Directors,
recommend to its stockholders adoption of this Agreement and shall include such
recommendation in the Proxy Statement. Without limiting the generality of the
foregoing, the Company's obligations pursuant to the first sentence of this
Section 5.4 shall not be affected by (i) the commencement, public proposal,
public disclosure or communication to the Company of any Takeover Proposal or
(ii) the withdrawal or modification by the Board of Directors of the Company or
any committee thereof of such Board of Directors' or such committee's approval
or recommendation of this Agreement, the Merger or the other transactions
contemplated by this Agreement.
SECTION 5.5 Acquisition Proposals.
(a) The Company shall, and shall cause its Affiliates,
Subsidiaries, and its and each of their respective officers, directors,
employees, consultants, financial advisors, attorneys, accountants and
other advisors, representatives and agents (collectively,
"Representatives") to, immediately cease and cause to be immediately
terminated any discussions or negotiations with any parties that may be
ongoing with respect to, or that are intended to or could reasonably be
expected to lead to, a Takeover Proposal. The Company shall not, and
shall cause its Affiliates, Subsidiaries and its and their respective
Representatives not to, (i) directly or indirectly solicit, initiate,
encourage or take any other action to facilitate (including by way of
furnishing or disclosing information) any Takeover Proposal, (ii) enter
into any agreement, arrangement or understanding with respect to any
Takeover Proposal (including any letter of intent, memorandum of
understanding or agreement in principle) or enter into any agreement,
arrangement or understanding (including any letter of intent,
memorandum of understanding or agreement in principle) which requires,
or is intended to or which could reasonably be expected to result in,
the abandonment, termination or the failure to consummate the Merger or
any other transaction contemplated by this Agreement, (iii) initiate or
participate in any way in any negotiations or discussions regarding, or
furnish or disclose to any Person (other than a party to this
Agreement) any information with respect to any Takeover Proposal or
(iv) grant any waiver or release under any standstill or any similar
agreement with respect to any class of the Company's equity securities;
provided, however, that at any time prior to the adoption of this
Agreement by the Required Company Stockholders, in response to a bona
fide written unsolicited Takeover Proposal received after the date
hereof that the Board of Directors of the Company determines in good
faith (after consultation with outside counsel and a financial advisor
of nationally recognized reputation) constitutes, or would reasonably
be expected to lead to, a Superior Proposal, and which Takeover
Proposal was not, directly or indirectly, the result of a breach of
this Section 5.5, the Company may, if its Board of Directors determines
in good faith (after consulting with a financial advisor of nationally
recognized reputation and outside counsel) that it is required to do so
in order to comply with its fiduciary duties to the stockholders of the
Company under applicable Law, and subject to compliance with
29
Section 5.5(b), (x) furnish information with respect to the Company and
its Subsidiaries to the Person making such Takeover Proposal (and its
representatives) pursuant to a customary confidentiality agreement not
less restrictive of such Person than the Confidentiality Agreement;
provided that all such information has previously been provided to
Buyer or is provided to Buyer prior to or concurrently with the time it
is provided to such Person, and (y) participate in discussions or
negotiations with the Person making such Takeover Proposal (and its
representatives) regarding such Takeover Proposal.
(b) Neither the Board of Directors of the Company nor any
committee thereof shall (i) (A) withdraw (or modify in a manner adverse
to Buyer), or propose to withdraw (or modify in a manner adverse to
Buyer), the approval, recommendation or declaration of advisability by
such Board of Directors or any such committee thereof of, this
Agreement, the Merger or the other transactions contemplated by this
Agreement or (B) recommend, adopt or approve, or propose to recommend,
adopt or approve, any Takeover Proposal (any action described in this
clause (i) being referred to as a "Company Adverse Recommendation
Change") or (ii) approve or recommend, or propose to approve or
recommend, or allow the Company or any of its Subsidiaries to execute
or enter into, any letter of intent, memorandum of understanding,
agreement in principle, merger agreement, acquisition agreement, option
agreement, joint venture agreement, partnership agreement or other
agreement constituting or related to, or that is intended to or would
reasonably be expected to lead to, any Takeover Proposal (other than a
confidentiality agreement referred to in and as permitted by Section
5.5(a)) (an "Acquisition Agreement") or which is intended to or which
could reasonably be expected to result in the abandonment, termination
or failure to consummate the Merger or any other transaction
contemplated by this Agreement. Notwithstanding the foregoing, at any
time prior to the adoption of this Agreement by the Required Company
Stockholders, the Board of Directors of the Company may make a Company
Adverse Recommendation Change in response to a Superior Proposal if
such Board of Directors determines in good faith (after consultation
with outside counsel and a financial advisor of nationally recognized
reputation) that it is required to do so in order to comply with its
fiduciary duties to the stockholders of the Company under applicable
Law; provided, however, that (i) no such Company Adverse Recommendation
Change may be made if the Company failed to comply with this Section
5.5, (ii) no such Company Adverse Recommendation Change shall be made
until after the third (3rd) Business Day following Buyer's receipt of
written notice (a "Notice of Adverse Recommendation") from the Company
advising Buyer that the Board of Directors of the Company intends to
take such action and specifying the reasons therefor, including the
terms and conditions of any Superior Proposal that is the basis of the
proposed action by the Board of Directors (it being understood and
agreed that any amendment to the financial terms or any other material
term of such Superior Proposal shall require a new Notice of Adverse
Recommendation and a new three (3) Business Day period) and
representing that the Company has complied with this Section 5.5, (iii)
during such three (3) Business Day period, the Company shall negotiate
with Buyer in good faith to make such adjustments to the terms and
conditions of this Agreement as would enable the Company to proceed
with its recommendation of this Agreement and not make a Company
Adverse Recommendation Change and (iv) the Company shall not make a
Company Adverse
30
Recommendation Change if, prior to the expiration of such three (3)
Business Day period, Buyer makes a proposal to adjust the terms and
conditions of this Agreement that the Company's Board of Directors
determines in good faith (after consultation with its financial
advisors) to be at least as favorable as the Superior Proposal after
giving effect to, among other things, the payment of the Termination
Fee set forth in Section 7.3 hereof.
(c) The Company agrees that in addition to the obligations of the
Company set forth in paragraphs (a) and (b) of this Section 5.5,
promptly on the date of receipt thereof, the Company shall advise Buyer
orally and in writing of any request for information or any Takeover
Proposal, or any inquiry, discussions or negotiations with respect to
any Takeover Proposal and the terms and conditions of such request,
Takeover Proposal, inquiry, discussions or negotiations (including the
identity of the Person making such Takeover Proposal) and the Company
shall promptly provide to Buyer copies of any written materials
received by the Company in connection with any of the foregoing, and
the identity of the Person or group making any such request, Takeover
Proposal or inquiry or with whom any discussions or negotiations are
taking place; provided, however, that the Company shall not be required
to disclose the identity of the Person or group making such request,
Takeover Proposal, inquiry or with whom any discussions or negotiations
are taking place to the extent that the Company is prohibited from
making such disclosure pursuant to a confidentiality agreement entered
into prior to the date of this Agreement. The Company agrees that it
shall keep Buyer fully informed of the status and details (including
amendments or proposed amendments) of any such request, Takeover
Proposal or inquiry and keep Buyer fully informed as to the details of
any information requested of or provided by the Company and as to the
details of all discussions or negotiations with respect to any such
request, Takeover Proposal or inquiry.
(d) Nothing contained in this Section 5.5 shall prohibit the
Company from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2 or Rule 14d-9 promulgated under the Exchange
Act; provided, however, that in no event shall the Company or its Board
of Directors or any committee thereof take, or agree or resolve to
take, any action prohibited by Section 5.5(b).
SECTION 5.6 Reasonable Efforts; Further Assurances.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, including, without limitation, Section 5.6(b) hereof,
each of the parties hereto will use all commercially reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or advisable under applicable Laws
to consummate and make effective the transactions contemplated by this
Agreement as expeditiously as practicable and to ensure that the
conditions set forth in Article VI are satisfied, insofar as such
matters are within the control of any of them, including, without
limitation, (i) making the requisite filings pursuant to the HSR Act,
(ii) making all necessary notifications required by and filing all
necessary applications with the FCC seeking the consent of the FCC to
the transfer of the Permits and Communications Licenses issued by the
FCC to the Company and each of its Subsidiaries in connection
31
with the consummation of the transactions contemplated by this
Agreement (the "FCC Consents") and (iii) making all necessary
notifications required by and filing all necessary applications with
the State PUCs seeking the consent of the applicable State PUC to the
assignment of the Permits and Communications Licenses issued or granted
by such State PUC to the Company or any of its Subsidiaries in
connection with the consummation of the transactions contemplated by
this Agreement (the "State PUC Consents"); and (iii) making all
necessary notifications required by and filing all necessary
applications with each Municipal Franchising Authority seeking the
consent of the Municipal Franchising Authority to the transfer of the
Permits and Communications Licenses issued by the Municipal Franchising
Authority to the Company and each of its Subsidiaries in connection
with the consummation of the transactions contemplated by this
Agreement (the "Municipal Franchising Authority Consents"). Without
limiting the generality of the foregoing, and subject to Section 5.2,
the Company, on the one hand, and Buyer and Merger Sub, on the other
hand, shall each furnish to the other such necessary information and
reasonable assistance as the other party may reasonably request in
connection with the foregoing.
(b) In furtherance and not in limitation of the foregoing, each
of the parties hereto will use all commercially reasonable efforts to
(i) make or cause to be made the applications or filings required to be
made by Buyer or the Company or any of their respective Subsidiaries
under or with respect to the HSR Act or with respect to the FCC
Consents, PUC Consents, and Municipal Franchising Authority Consents,
and to pay any fees due of it in connection with such applications or
filings, within ten Business Days after the date hereof, and (ii)
comply as expeditiously as practicable with any request under or with
respect to the HSR Act or with respect to the FCC Consents and PUC
Consents for additional information, documents or other materials
received from the Federal Trade Commission, the Department of Justice,
the FCC or any State PUC in connection with such applications or
filings or the Merger and the other transactions contemplated by this
Agreement. Each party hereto shall promptly inform the others of any
communications from any Governmental Entity regarding any of the
transactions contemplated by this Agreement. Notwithstanding anything
to the contrary contained in this Section 5.6, Buyer shall be under no
obligation whatsoever to take any action requested by any Governmental
Entity in order to consummate the Merger or other transactions
contemplated by this Agreement, including, without limitation, making
any divestiture of any asset or agreeing to any type of behavioral
relief that a Governmental Entity may request.
(c) Between the date hereof and the Closing Date, the Company
shall, and shall cause its Subsidiaries to, maintain the validity of
the Communications Licenses and comply in all material respects with
all requirements of the Communications Licenses and the rules and
regulations of the FCC and State PUCs. The Company shall, and shall
cause its Subsidiaries to, use reasonable commercial efforts to (a)
refrain from taking any action which may jeopardize the validity of any
of the Communications Licenses or result in the revocation, surrender
or any adverse modification of, forfeiture of, or failure to renew
under regular terms, any of the Communications Licenses, (b) prosecute
with due diligence any pending applications with respect to the
Communications Licenses, including any renewals thereof, and (c) with
respect to Communications Licenses, make
32
all filings and reports and pay all fees necessary or reasonably
appropriate for the continued operation of the businesses of the
Company and its Subsidiaries, as and when such approvals, consents,
permits, licenses, filings, or reports or other authorizations are
necessary or appropriate.
(d) Subject to Section 5.6(b), in case at any time after the
Effective Time any further action is necessary to carry out the
purposes of this Agreement, each of the parties to this Agreement shall
take or cause to be taken all such necessary action, including the
execution and delivery of such further instruments and documents, as
may be reasonably requested by any party hereto for such purposes or
otherwise to complete or perfect the transactions contemplated by this
Agreement.
(e) The Company shall, to the extent Buyer may reasonably request
in connection with any third-party financing Buyer and Merger Sub may
seek to obtain in order to fund the transactions contemplated by this
Agreement and to refinance the existing indebtedness of the Company,
use its commercially reasonable efforts to, and shall cause the
Subsidiaries and its and their respective officers, employees and
advisors to use their respective commercially reasonable efforts to:
(i) cooperate in the preparation of any offering memorandum, private
placement memorandum, prospectuses or similar documents, (ii) make
senior management of the Company reasonably available for meetings and
due diligence sessions, (iii) cooperate with prospective lenders,
placement agents, initial purchasers and their respective advisors in
performing their due diligence, (iv) enter into customary agreements
with underwriters, initial purchasers or placement agents, (v) enter
into or help procure pledge and security documents, landlord waivers,
other definitive financing documents or other requested certificates or
documents, including, without limitation, documents relating to the
release of liens in connection with the Company's existing
indebtedness, and (vi) provide reasonable assistance with respect to
obtaining a customary certificate of the chief financial officer of the
Company with respect to solvency matters, comfort letters of
accountants, legal opinions and real estate title documentation as may
be reasonably requested by Buyer; provided that none of the Company or
any Subsidiary shall be required to pay any commitment or similar fee
or incur any other liability in connection with any such third-party
financing prior to the Effective Time. Buyer shall, promptly upon
request by the Company, reimburse the Company for all reasonable
out-of-pocket costs incurred by the Company or the Subsidiaries in
connection with such cooperation. Notwithstanding the foregoing,
nothing in this Agreement shall require the Company Board to take any
action to approve any third party financing provided in connection with
the Merger. Between the date hereof and the Closing Date, the Company
shall, and shall cause its Subsidiaries, and their respective officers,
employees, agents, consultants and other representatives to cooperate
with Buyer to develop and implement a business integration plan
(including, without limitation, with respect to network integration,
customer relationship management and personnel deployment).
SECTION 5.7 Public Announcements. The parties hereto agree to consult
with each other before issuing any press release or making any public statement
with respect to this Agreement or the transactions contemplated hereby and,
except as may be required by applicable
33
Law, will not issue any such press release or make any such public statement
prior to such consultation.
SECTION 5.8 Indemnification of Directors and Officers.
(a) For not less than six years from and after the Effective
Time, Buyer agrees to, and to cause the Surviving Corporation to,
indemnify and hold harmless all past and present directors and officers
of the Company ("Covered Persons") to the same extent such persons are
indemnified as of the date of this Agreement by the Company pursuant to
the Company's second amended and restated certificate of incorporation
and second amended and restated by-laws and indemnification agreements,
if any, in existence on the date of this Agreement with any Covered
Persons for acts or omissions occurring at or prior to the Effective
Time; provided, however, that Buyer agrees to, and to cause the
Surviving Corporation to, indemnify and hold harmless such persons to
the fullest extent permitted by applicable Law for acts or omissions
occurring in connection with the approval of this Agreement and the
consummation of the transactions contemplated hereby. Each Covered
Person shall be entitled to advancement of expenses incurred in the
defense of any claim, action, suit, proceeding or investigation with
respect to any matters subject to indemnification hereunder, provided
that any person to whom expenses are advanced undertakes, to the extent
required by the DGCL, to repay such advanced expenses if it is
ultimately determined that such person is not entitled to
indemnification. Notwithstanding anything herein to the contrary, if
any claim, action, suit, proceeding or investigation (whether arising
before, at or after the Effective Time) is made against any Covered
Person with respect to matters subject to indemnification hereunder on
or prior to the sixth anniversary of the Effective Time, the provisions
of this Section 5.8 shall continue in effect until the final
disposition of such claim, action, suit, proceeding or investigation.
(b) The Surviving Corporation shall provide to the Company's
present and past directors and officers a fully prepaid insurance and
indemnification policy ("D&O Insurance") in amount and scope as
required by the Trust Agreement that provides coverage for events
occurring on or before the Effective Time. If such prepaid policies
have been obtained prior to the Effective Time, Buyer shall, and shall
cause the Surviving Corporation to, maintain such policies in full
force and effect, and continue to honor the obligations thereunder. The
Company represents that the current annual premiums paid by the Company
in respect of D&O Insurance is set forth in Section 5.8(b) of the
Company Disclosure Schedule.
(c) The obligations under this Section 5.8 shall not be
terminated or modified in such a manner as to affect adversely any
indemnitee to whom this Section 5.8 applies without the consent of such
affected indemnitee (it being expressly agreed that the indemnitees to
whom this Section 5.8 apply and their respective heirs, successors and
assigns shall be express third-party beneficiaries of this Section
5.8). In the event Buyer or the Surviving Corporation (i) consolidates
with or merges into any other person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger or (ii)
transfers all or substantially all of its properties and assets to any
person, then, and in each such case, proper provision shall be made so
that such continuing or
34
surviving corporation or entity or transferee of such assets, as the
case may be, shall assume the obligations set forth in this Section
5.8.
SECTION 5.9 Expenses. Except for expenses arising out of the filing of
a premerger notification and report form under the HSR Act with respect to the
Merger (which such expenses shall be shared equally by Buyer and the Company)
and as otherwise provided in Section 7.3, each party hereto shall bear its own
fees, costs and expenses incurred in the pursuit of the transactions
contemplated by this Agreement, including the fees and expenses of its
respective counsel, financial advisors and accountants.
SECTION 5.10 Section 16 Compliance. Prior to the Effective Time, the
Company shall take all such steps as may be required to cause to be exempt under
Rule 16b-3 promulgated under the Exchange Act, any dispositions of shares of
Common Stock (including derivative securities with respect to shares of Common
Stock) that are treated as dispositions under such rule and result from the
Merger or other transactions contemplated by this Agreement by each individual
who is subject to the reporting requirements of Section 16(a) of the Exchange
Act with respect to the Company.
SECTION 5.11 Supplemental Information. The Company shall give prompt
notice to Buyer of (i) any written notice or other communication from any third
party alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement, (ii) any
Company Material Adverse Effect or the occurrence of any event or events which
would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, (iii) the Company becoming aware of any facts,
matters or circumstances that would cause any condition to the obligations of
Buyer or Merger Sub to effect the Merger and the other transactions contemplated
by this Agreement not to be satisfied or (iv) the occurrence or existence of any
event which would, or could with the passage of time or otherwise, make any
representation or warranty contained herein (without giving effect to any
exception or qualification contained therein relating to materiality or a
Company Material Adverse Effect) untrue in any material respect; provided,
however, that the delivery of notice pursuant to this Section 5.11 shall not
limit or otherwise affect the remedies available hereunder to Buyer.
SECTION 5.12 Tax Matters.
(a) Buyer shall be liable for all Transfer Taxes arising from the
transactions contemplated by this Agreement. "Transfer Taxes" means all
sales, use, real property transfer, real property gains, transfer,
stamp, registration, documentary, recording or similar Taxes, together
with any interest thereon, penalties, fines, costs, fees or additions
to tax. The parties will cooperate with each other in timely making all
filings, returns and forms as may be required in connection with the
payment of any Transfer Taxes.
(b) The Company shall deliver to Buyer a certificate pursuant to
Treasury Regulations Section 1.1445-2(c)(3) stating that the Company is
not nor has it been a U.S. real property holding corporation (as
defined in Section 897(c)(2) of the Code) during the applicable period
specified in Section 897(c)(1) of the Code.
35
(c) During the period from the date of this Agreement to the
Closing Date, the Company and its Subsidiaries shall:
(i) prepare, in the ordinary course (except as otherwise
required by Law), and timely file all material Tax Returns
required to be filed by it (or them) on or before the Closing
Date ("Post-Signing Returns");
(ii) fully and timely pay all Taxes shown due and payable
in respect of such Post-Signing Returns that are so filed and
provide Buyer with copies of such Post-Signing Returns as soon as
practicable after filing; and
(iii) promptly notify the Buyer of any material federal,
state, local or foreign income or franchise and any other
material suit, claim, contest, investigation, administrative or
judicial proceeding or audit initiated against or with respect to
the Buyer or any of its Subsidiaries in respect of any Tax matter
(other than those set forth on the Disclosure Schedules)
(collectively, "Contests"), and not to settle or compromise any
such Contests without the Buyer's consent, which consent shall
not be unreasonably withheld or delayed.
SECTION 5.13 State Takeover Statutes; Rights Agreement. (a) Buyer, the
Company and their respective Board of Directors shall (i) take all reasonable
action necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to this Agreement, or the transactions
contemplated by this Agreement and (ii) if any state takeover statute or similar
statute becomes applicable to this Agreement or the transactions contemplated by
this Agreement, take all reasonable action necessary to ensure that the
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on this Agreement or the
transactions contemplated by this Agreement.
(b) The Board of Directors of the Company shall take all action to the
extent necessary in order to render the Rights Agreement inapplicable to the
Merger and the other transactions contemplated by this Agreement. Except in
connection with the foregoing sentence, the Board of Directors of the Company
shall not, without the prior written consent of Buyer, (i) amend or waive any
provision of the Rights Agreement or (ii) take any action with respect to, or
make any determination under, the Rights Agreement, including a redemption of
the Rights, in each case in order to facilitate any Takeover Proposal with
respect to the Company.
SECTION 5.14 Employee Benefits Matters. (a) Buyer hereby agrees that,
for a period of six (6) months immediately following the Effective Time, it
shall, or it shall cause the Surviving Corporation and its subsidiaries to,
maintain employee benefit and compensation plans, programs, contracts,
arrangements and executive perquisites for the benefit of active employees of
the Company and the Subsidiaries which, in the aggregate, will provide
compensation and benefits (other than equity compensation) that are at least
equivalent to, and no less favorable than, the compensation and benefits
provided to such employees under the employee benefit plans, programs, contracts
and arrangements of the Company and the Subsidiaries as in effect immediately
prior to the Effective Time; provided, however, that, notwithstanding the
foregoing, Buyer may at any time and in all events provide (or cause the
36
Surviving Corporation to provide) health benefits to such employees under an
arrangement substantially similar to that provided to Buyer's or its
Subsidiaries' similarly-situated employees. From and after the Effective Time,
Buyer shall cause the Surviving Corporation and its Subsidiaries to honor in
accordance with their terms, all contracts, agreements and commitments of the
Company and its Subsidiaries as in effect immediately prior to the Effective
Time that are applicable to any current or former employees, directors or
consultants of the Company or any of its Subsidiaries.
(b) Employees of the Company and its Subsidiaries shall receive credit
for all purposes (including, without limitation, for purposes of eligibility to
participate, vesting, benefit accrual and eligibility to receive benefits) under
any employee benefit plan, program or arrangement established or maintained by
Buyer, the Surviving Corporation or any of their respective Subsidiaries for
service accrued or deemed accrued prior to the Effective Time with the Company
or any of its Subsidiaries; provided, however, that such crediting of service
shall not operate to duplicate any benefit or the funding of any such benefit
and that in no event shall such service be required to be counted with respect
to any equity incentive award or for purposes of benefit accrual under any
defined benefit pension plan. In addition, for purposes of participation by
employees of the Company and its Subsidiaries in any medical plan of Buyer or
its Subsidiaries, Buyer or its applicable Subsidiary shall waive any preexisting
condition limitations to the extent waived under the applicable medical plan of
the Company and, with respect to the plan year in which such employees first
participate in such medical plan, shall credit such employees for any out of
pocket expenditures, deductibles and employee contributions that were credited
under any predecessor medical plan of the Company or any of its Subsidiaries.
(c) Buyer hereby agrees that for a period of two years immediately
following the Effective Time it shall, or shall cause the Surviving Corporation
and its Subsidiaries to provide all employees of the Company and the
Subsidiaries who are employed thereby as of immediately prior to the Effective
Time (other than employees who, as of the Effective Time, are party to severance
agreements) who are terminated without cause with a minimum level of severance
benefits equal to two (2) weeks for any period of employment for less than one
year plus one (1) week for each full or partial year after their first year of
employment. For purposes of determining the amount of their minimum severance
benefits under this Section 5.14(c), employees of the Company and its
Subsidiaries shall receive credit for all service accrued or deemed accrued
prior to the Effective Time with the Company or any of its subsidiaries.
SECTION 5.15 Financing. Buyer shall use its best efforts to arrange the
Financing on the terms and conditions described in the Commitment Letter,
including using best efforts to (i) negotiate definitive agreements with respect
thereto on terms and conditions contained therein and (ii) satisfy or obtain the
waiver of all conditions applicable to Buyer and Merger Sub in such definitive
agreements. In the event any portion of the Financing becomes unavailable, Buyer
shall use its best efforts to arrange to obtain any such portion from
alternative sources. Buyer shall give the Company prompt notice of any material
breach by any party of the Commitment Letter or any termination of the
Commitment Letter. Buyer shall keep the Company informed on a reasonably current
basis in reasonable detail of the status of its efforts to arrange the Financing
and shall not permit any material amendment or modification to be made to, or
any waiver of any
37
material provision or remedy under, the Commitment Letter without first
consulting the Company.
SECTION 5.16 Letter of Credit. (a) Buyer hereby agrees that on or prior
to May 19, 2006, it shall cause the bank issuing the Initial Letter of Credit to
provide an amendment thereto increasing the amount available thereunder to
$6,000,000 but otherwise keeping the remaining terms of the Letter of Credit
unchanged, or a substitute letter of credit for $6,000,000 otherwise having the
same terms as the Initial Letter of Credit (the Initial Letter of Credit, as so
amended, or such substitute letter of credit, as applicable, being hereinafter
referred to as the "Letter of Credit"). If Buyer does not provide such amendment
by such date, the Company shall be entitled to draw the entire amount available
under the Initial Letter of Credit as liquidated damages for failure to comply
with this Section 5.16(a) and shall have no obligation to return such amount to
Buyer or Merger Sub; provided, however, that, if this Agreement is terminated
prior to the Effective Time for any reason other than a breach by Buyer or
Merger Sub, the Company shall no later than the second Business Day after such
termination repay such amount to Buyer by wire transfer of immediately available
funds.
(b) If Buyer does arrange for the amendment to the Letter of Credit as
provided in subsection (a) hereto, the Letter of Credit shall serve as liquidity
support to the Company in the event that Buyer and Merger Sub do not consummate
the Merger within twenty (20) Business Days after receipt by Buyer of a written
notification by an authorized officer of the Company that all of the conditions
specified in Sections 6.1 and 6.2 have been satisfied. In such event, the
Company will be entitled to draw upon the Letter of Credit by delivery of the
draw certificate referred to therein signed by two authorized officers of the
Company. The delivery of such draw certificate shall be without prejudice to the
rights of Buyer and Merger Sub, on the one hand, and the Company, on the other
hand, to assert any claim or position with respect to any issues or disputes
between the parties concerning the rights and obligations of the parties under
this Agreement, including without limitation whether the Company had the right
to deliver the draw notice, whether Buyer and Merger Sub were required to
effectuate the Merger and whether any condition in Section 6.1 or 6.2 hereof had
been satisfied. If a court having jurisdiction over the actions, suits and
proceedings arising under this Agreement issues a final, non-appealable judgment
(a "Final Judgment") in favor of Buyer substantially to the effect that Buyer
and Merger Sub have no liability under this Agreement for failing to effectuate
the Merger, the Company shall within two Business Days of issuance thereof
reimburse Buyer the full amount drawn under the Letter of Credit plus interest
on such amount at a rate equal to the prime rate announced from time to time by
XX Xxxxxx Xxxxx Bank plus 3% per annum. If such Final Judgment is in favor of
the Company, any amounts drawn under the Letter of Credit shall be applied to
reduce any damages awarded to the Company by such court. To the extent that the
amounts so drawn under the Letter of Credit exceed the damages awarded by such
court, the Company shall reimburse such excess to the Buyer within two Business
Days after the issuance of such award.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1 Conditions Precedent to Obligations of Each Party. The
respective obligations of each party hereto to effect the Merger shall be
subject to the fulfillment or
38
satisfaction, prior to or on the Closing Date, of each of the following
conditions precedent, any or all of which may be waived, in whole or in part, to
the extent permitted by Section 8.4 and applicable Law:
(a) Stockholder Approval. This Agreement shall have been adopted
by the Required Company Stockholders.
(b) No Order. No court of competent jurisdiction or other
Governmental Entity shall have enacted, issued, promulgated, enforced
or entered any order, decree, judgment, injunction or other ruling
(whether temporary, preliminary or permanent), in any case which is in
effect and which prevents or prohibits consummation of the Merger.
(c) HSR. Any applicable waiting period, together with any
extensions thereof, under the HSR Act shall have expired or been
terminated.
(d) Other Governmental Approvals. (i) All consents, approvals or
orders of, authorizations of, or actions by the FCC, including the FCC
Consents, and (ii) all State PUC approvals, in each case required to
consummate the Merger and the other transactions contemplated hereby,
including the State PUC Consents, shall have been obtained and shall
have become Final Orders; provided, however that no FCC Consent or
State PUC Consent shall impose or be conditioned upon Buyer's, Merger
Sub's or their Affiliates' agreement to or compliance with any term,
condition or restriction, or result in the waiver of rights asserted by
any of the foregoing, that would reasonably be likely to be materially
adverse to Buyer, Surviving Corporation or any of their Affiliates in
the reasonable judgment of Buyer.
SECTION 6.2 Conditions Precedent to Obligations of Buyer and Merger
Sub. The obligations of Buyer and Merger Sub to effect the Merger shall be
subject to the fulfillment or satisfaction, prior to or on the Closing Date, of
each of the following conditions precedent, any or all of which may be waived,
in whole or in part, to the extent permitted by Section 8.4 and applicable Law:
(a) Representations and Warranties. (i) Each of the Company's
representations and warranties contained in this Agreement other than
Section 3.3 hereof (without giving effect to any "material",
"materiality" or "Company Material Adverse Effect" qualification on
such representations and warranties) shall be true and correct on and
as of the date of this Agreement and on and as of the Closing Date with
the same effect as though such representations and warranties were made
on and as of the Closing Date (except to the extent that such
representations and warranties expressly relate to an earlier date, in
which case such representations and warranties shall be as of such
earlier date), except where the failure or failures to be true and
correct, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect; and (ii) the
Company's representations and warranties contained in Section 3.3 shall
be true and correct on and as of the date of this Agreement and on and
as of the Closing Date with the same effect as though such
representations and
39
warranties were made on and as of the Closing Date (except to the
extent that such representations and warranties expressly relate to an
earlier date, in which case such representations and warranties shall
be true and correct as of such earlier date).
(b) Performance of Obligations. The Company shall have performed
in all material respects and complied in all material respects with all
agreements and conditions contained in this Agreement that are required
to be performed or complied with by it prior to or at the Closing Date.
(c) Closing Certificate. Buyer shall have received a certificate
dated the Closing Date and signed by an authorized officer of the
Company, certifying that the conditions specified in Sections 6.2(a)
and 6.2(b) have been satisfied.
(d) Company Material Adverse Effect. Since December 31, 2005, no
Company Material Adverse Effect shall have occurred and be continuing
and no event, change or effect shall have occurred and be continuing
that would reasonably be expected to have a Company Material Adverse
Effect.
(e) Director Resignations. The Company shall have delivered to
Buyer a resignation from each member of the Board of Directors of the
Company or comparable body for each Subsidiary of the Company, which
shall be effective as of immediately after the Effective Time, unless
specified by Buyer no later than five Business Days prior to Closing.
SECTION 6.3 Conditions Precedent to Obligations of the Company. The
obligations of the Company to effect the Merger shall be subject to the
fulfillment or satisfaction, prior to or on the Closing Date, of each of the
following conditions precedent, any or all of which may be waived, in whole or
in part, to the extent permitted by Section 8.4 and applicable Law:
(a) Representations and Warranties. Each of Buyer's and Merger
Sub's representations and warranties contained in this Agreement
(without giving effect to any "material" or "materiality" qualification
on such representations and warranties) shall be true and correct on
and as of the date of this Agreement and on and as of the Closing Date
with the same effect as though such representations and warranties were
made on and as of the Closing Date, except to the extent that such
representations and warranties expressly relate to an earlier date, in
which case such representations and warranties shall be as of such
earlier date, except where the failure to be true and correct,
individually or in the aggregate, would not reasonably be expected to
have a material adverse effect on the ability of Buyer and Merger Sub
to perform their respective obligations under this Agreement.
(b) Performance of Obligations. Buyer and Merger Sub shall have
performed in all material respects and complied in all material
respects with all agreements and conditions contained in this Agreement
that are required to be performed or complied with by them prior to or
at the Closing.
(c) Closing Certificate. The Company shall have received a
certificate dated the Closing Date and signed by an authorized officer
of Buyer, certifying that the conditions specified in Sections 6.3(a)
and 6.3(b) have been satisfied.
40
ARTICLE VII
TERMINATION
SECTION 7.1 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after adoption of this Agreement by the Required Company Stockholders:
(a) by mutual written consent of Buyer and the Company;
(b) by either Buyer or the Company:
(i) if this Agreement is not adopted by the Required
Company Stockholders at the Company Stockholders' Meeting or any
adjournment thereof at which this Agreement has been voted upon
(if, in the case of the Company, it has not violated Sections
5.3, 5.4 or 5.5);
(ii) if the Merger shall not have been consummated by
February 1, 2007, (the "Termination Date"); provided, however,
that the right to terminate this Agreement under this Section
7.1(b)(ii) shall not be available to any party whose breach of
any provision of this Agreement has been the cause of, or
resulted in, the failure of the Merger to occur on or before the
Termination Date; or
(iii) if there shall be any final non-appealable order,
decree, ruling or other action issued by a Governmental Entity
permanently restraining, enjoining or otherwise prohibiting
consummation of the Merger; provided, however, that the right to
terminate this Agreement pursuant to this Section 7.1(b)(iii)
shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been a principal cause of or
resulted in any such order, decree, ruling or other action.
(c) by the Company:
(i) if Buyer or Merger Sub (A) shall have breached any of
the covenants or agreements contained in this Agreement to be
complied with by Buyer or Merger Sub such that the closing
condition set forth in Section 6.3(b) would not be satisfied or
(B) there exists a breach of any representation or warranty of
Buyer or Merger Sub contained in this Agreement such that the
closing condition set forth in Section 6.3(a) would not be
satisfied, and, in the case of both (A) and (B), such breach is
incapable of being cured by the Termination Date or is not cured
by Buyer or Merger Sub within twenty (20) Business Days after
Buyer or Merger Sub receives written notice of such breach from
the Company; or
(ii) if prior to the adoption of this Agreement by the
Required Company Stockholders at the Company Stockholders'
Meeting, (A) the Company's Board of Directors has received a
Superior Proposal, (B) the Company's Board of Directors
determines in good faith, after consultation with a
41
financial advisor of nationally recognized reputation and outside
legal counsel, that such action is required to comply with the
fiduciary duties of the Board of Directors to the Company's
stockholders under applicable Law, (C) the Company has complied
with Sections 5.3, 5.4 and 5.5 and (D) at the time of such
termination, Buyer has received the fee set forth in Section 7.3;
provided that the Company's Board of Directors shall only be able
to terminate this Agreement pursuant to this clause (ii) after
three (3) Business Days following Buyer's receipt of written
notice advising Buyer that the Company's Board of Directors is
prepared to do so, and only if, during such three (3) Business
Day period, the Company and its advisors will have negotiated in
good faith with Buyer to make such adjustments in the terms and
conditions of this Agreement as would enable the parties to
proceed with the transactions contemplated herein on such
adjusted terms.
(d) by Buyer:
(i) if the Company (A) shall have breached any of the
covenants or agreements contained in this Agreement to be
complied with by the Company such that the closing condition set
forth in Section 6.2(b) would not be satisfied or (B) there
exists a breach of any representation or warranty of the Company
contained in this Agreement such that the closing condition set
forth in Section 6.2(a) would not be satisfied, and, in the case
of both (A) and (B), such breach is incapable of being cured by
the Termination Date or is not cured by the Company within twenty
(20) Business Days after the Company receives written notice of
such breach from Buyer or Merger Sub; or
(ii) if, prior to the adoption of this Agreement by the
Required Company Stockholders at the Company Stockholders'
Meeting, (A) a Company Adverse Recommendation Change shall have
occurred, (B) the Company shall have failed to include in the
Proxy Statement the recommendation of the Board of Directors of
the Company that its stockholders vote in favor of the Merger and
the transactions contemplated hereby, (C) the Board of Directors
of the Company fails publicly to reaffirm its recommendation of
this Agreement, the Merger or the other transactions contemplated
by this Agreement within ten (10) days after Buyer requests in
writing that such recommendation or determination be reaffirmed,
(D) a tender or exchange offer relating to any shares of Common
Stock will have been commenced and the Company will not have sent
to its security holders, within ten (10) days after the
commencement of such tender or exchange offer, a statement
disclosing that the Company recommends rejection of such tender
or exchange offer, (E) a Takeover Proposal is publicly announced,
and the Company fails to issue, within ten (10) days after such
Takeover Proposal is announced, a press release that reaffirms
the recommendation of the Board of Directors of the Company that
its stockholders vote in favor of the Merger and the transactions
contemplated hereby or (F) the Company has breached any of its
obligations under Sections 5.3 or 5.4 to call, give notice of,
convene and hold the Company Stockholders' Meeting and timely
mail the Proxy Statement as contemplated thereby, which has not
been cured (or is not capable of being cured)
42
within twenty (20) Business Days following receipt by the Company
of written notice of such breach.
SECTION 7.2 Effect of Termination and Abandonment. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VII, written notice thereof shall be given to the other parties hereto,
and this Agreement (other than as set forth in this Article VII and other than
Sections 5.2(b) [Confidentiality], 5.7 [Public Announcements], 5.9 [Expenses],
and Articles VIII and IX) shall become void and of no effect with no liability
on the part of any party hereto (or of any of its respective directors,
officers, employees, Affiliates, agents, legal and financial advisors or other
representatives); provided, however, that except as otherwise provided herein,
no such termination shall relieve any party hereto of any liability or damages
resulting from any willful breach of this Agreement. If this Agreement is
terminated and the Merger is abandoned pursuant to this Article VII, all
confidential information received by Buyer or its representatives and Affiliates
with respect to the Company, its Subsidiaries and their respective Affiliates
shall be treated in accordance with the Confidentiality Agreement, which shall
remain in full force and effect notwithstanding the termination of this
Agreement.
SECTION 7.3 Termination Fee.
(a) If this Agreement shall be terminated pursuant to:
(i) Section 7.1(b)(i), 7.1(b)(ii), or 7.1(d)(i) and (x) at
any time after the date hereof and before such termination a
Takeover Proposal shall have been publicly announced or otherwise
communicated to the Company's Board of Directors and (y) within
twelve (12) months of the termination of this Agreement, the
Company enters into a definitive agreement with any third party
with respect to a Takeover Proposal or any such transaction
involving a Takeover Proposal is consummated; or
(ii) Section 7.1(c)(ii) or 7.1(d)(ii) hereof,
then the Company shall (1) in the case of termination
pursuant to clause (i) of this Section 7.3(a), upon the earlier
to occur of the execution of such definitive agreement and such
consummation, (2) in the case of termination pursuant to Section
7.1(d)(ii), not later than the close of business on the Business
Day following such termination or (3) in the case of termination
pursuant to Section 7.1(c)(ii), on the date of termination, pay
Buyer a non-refundable fee in an amount equal to six million
dollars ($6,000,000) (the "Termination Fee"), payable by wire
transfer of immediately available funds to an account designated
in writing to the Company by Buyer. For purposes of this
paragraph (a), "Takeover Proposal" shall have the meaning
assigned to such term in Section 9.1, except that all references
to "10%" shall be changed to "25%".
(b) If this Agreement is terminated under any of the
circumstances described in Section 7.3(a) (but with respect to Section
7.3(a)(i), without regard to whether any of the circumstances described
in clause (y) thereof have occurred), the Company shall reimburse Buyer
for all its fees and expenses (including attorney's fees) incurred in
43
connection herewith and the transactions contemplated hereby (the
"Company Expense Reimbursement Amount") up to a maximum amount of two
million dollars ($2,000,000), which reimbursement shall be made in cash
by wire transfer of immediately available funds to an account
designated in writing to the Company by Buyer, not later than the close
of business on the fifth (5th) Business Day following such termination.
(c) If the Company fails to promptly pay the Termination Fee or
the Company Expense Reimbursement Amount, and, in order to obtain such
payment Buyer commences a suit which results in a judgment against the
Company for the Termination Fee or the Company Expense Reimbursement
Amount, the Company shall pay to Buyer its costs and expenses
(including attorney's fees) in connection with such suit, together with
interest on the amount of the Termination Fee at a rate equal to the
prime rate announced from time to time by XX Xxxxxx Xxxxx Bank plus 3%
per annum.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Entire Agreement. This Agreement (including the annexes,
exhibits and schedules hereto) and the Confidentiality Agreement set forth the
entire understanding of the parties hereto with respect to the transactions
contemplated hereby, and, except as set forth in this Agreement, there are no
representations or warranties, express or implied, made by any party to this
Agreement with respect to the subject matter of this Agreement and the
Confidentiality Agreement. Except for the matters set forth in the
Confidentiality Agreement, any and all previous agreements and understandings
between or among the parties hereto regarding the subject matter hereof, whether
written or oral, are superseded by this Agreement and the agreements referred to
or contemplated herein.
SECTION 8.2 Assignment and Binding Effect; Third Party Beneficiaries.
(a) This Agreement shall not be assigned by any party hereto without the prior
written consent of the other parties hereto; provided, however, that Buyer shall
be permitted to assign this Agreement to any Affiliate of Buyer (provided that
Buyer shall remain liable for all of its obligations hereunder following such
assignment). All the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto.
(b) Except as provided in Section 5.8(c), nothing in this
Agreement, express or implied, is intended or shall be construed to
create any third-party beneficiaries. Nothing contained herein shall be
interpreted as limiting the Company's right to seek damages based on
diminution of the value of outstanding shares of Common Stock, Warrants
or Options in the event that Buyer or Merger Sub breach their
obligations to consummate the Merger in accordance with the terms of
this Agreement.
SECTION 8.3 Notices. Any notice, request, demand, waiver, consent,
approval, or other communication which is required or permitted to be given to
any party hereunder shall be in writing and shall be deemed given only if
delivered to such party personally or sent to such party by facsimile
transmission (promptly followed by a hard-copy delivered in accordance with
44
this Section 8.3) or by registered or certified mail (return receipt requested),
with postage and registration or certification fees thereon prepaid, addressed
to the party at its address set forth below:
If to Buyer, Merger Sub or the Surviving Corporation:
U.S. TelePacific Holdings Corp.
000 X. Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxxx Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: E. Xxxxxxx Xxxxxxx
If to the Company:
Mpower Holding Corporation
000 Xxxxx'x Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
with a copy to:
Shearman & Sterling LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxx, Xx.
or to such other address or Person as any party hereto may have specified in a
notice duly given to the other parties hereto as provided herein. Such notice,
request, demand, waiver, consent, approval or other communication will be deemed
to have been given as of the date so delivered, telecopied or mailed.
SECTION 8.4 Amendment and Modification; Waiver.
(a) This Agreement may be amended by the parties hereto by action
taken by or on behalf of their respective Boards of Directors at any
time prior to the Effective Time; provided, however, that, after
approval of the Merger by the stockholders of the Company, no amendment
may be made that, by Law, requires further approval by such
45
stockholders. This Agreement may not be amended except by an instrument
in writing signed by the parties hereto.
(b) At any time prior to the Effective Time, Buyer and Merger
Sub, on the one hand, and the Company, on the other hand, may (i)
extend the time for the performance of any of the obligations or other
acts of the other, (ii) waive any inaccuracies in the representations
and warranties of the other contained herein or in any document
delivered pursuant hereto and (iii) waive compliance by the other with
any of the agreements or conditions contained herein; provided,
however, that after any approval of the Merger by the stockholders of
the Company, there may not be any extension or waiver of this Agreement
or any portion thereof which, by Law, requires further approval by such
stockholders. Any such extension or waiver shall be valid only if set
forth in an instrument in writing signed by the party or parties to be
bound thereby, but such extension or waiver or failure to insist on
strict compliance with an obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
SECTION 8.5 Governing Law; Consent to Jurisdiction. (a) THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK, EXCEPT THAT THE CONSUMMATION AND EFFECTIVENESS OF THE MERGER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
DELAWARE.
(b) All actions, suits and proceedings arising out of or relating to
this Agreement shall be heard and determined exclusively in any New York state
or federal court sitting in the Borough of Manhattan of The City of New York.
The parties hereto hereby (a) submit to the exclusive jurisdiction of any state
or federal court sitting in the Borough of Manhattan of The City of New York for
the purpose of any action, suit or proceeding arising out of or relating to this
Agreement brought by any party hereto, and (b) irrevocably waive, and agree not
to assert by way of motion, defense, or otherwise, in any such action, suit, or
proceeding, any claim that it is not subject personally to the jurisdiction of
the above-named courts, that its property is exempt or immune from attachment or
execution, that such action, suit or proceeding is brought in an inconvenient
forum, that the venue of such action, suit or proceeding is improper, or that
this Agreement or the transactions contemplated hereby may not be enforced in or
by any of the above-named courts.
SECTION 8.6 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE CONFIDENTIALITY AGREEMENT OR
BY THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 8.7 Severability. If any term or other provision of this
Agreement is determined to be invalid, illegal or incapable of being enforced by
any rule of law or public policy, all other terms and provisions of the
Agreement shall remain in full force and effect. Upon such determination, the
parties hereto shall negotiate in good faith to modify this
46
Agreement so as to give effect to the original intent of the parties hereto to
the fullest extent permitted by applicable Law.
SECTION 8.8 Counterparts. This Agreement may be executed in one or more
counterparts (including by facsimile), each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
SECTION 8.9 Enforcement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties hereto shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any court in
the United States or any state having jurisdiction, subject to Section 8.5(b),
this being in addition to any other remedy to which they are entitled at law or
in equity.
SECTION 8.10 Non-Survival of Representations and Warranties.
Notwithstanding anything to the contrary contained herein, no representations or
warranties in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Merger. This Section 8.10 shall not limit any
covenant or agreement of the parties which by its terms contemplates performance
after the Merger.
SECTION 8.11 Damages. NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED HEREIN, NO PARTY HERETO SHALL BE LIABLE TO ANY OTHER PARTY HERETO
(INCLUDING ITS RESPECTIVE HEIRS, LEGAL REPRESENTATIVES, SUCCESSORS OR ASSIGNS,
AS THE CASE MAY BE, HEREUNDER) FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL OR
PUNITIVE DAMAGES ARISING OUT OF THIS AGREEMENT OR ITS TERMINATION PURSUANT TO
ARTICLE VII, WHETHER FOR BREACH OF REPRESENTATION OR WARRANTY OR COVENANT OR
OTHER AGREEMENT OR ANY OBLIGATION ARISING THEREFROM OR OTHERWISE, WHETHER
LIABILITY IS ASSERTED IN CONTRACT OR TORT (INCLUDING NEGLIGENCE AND STRICT
PRODUCT LIABILITY) AND REGARDLESS OF WHETHER SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF ANY SUCH LOSS OR DAMAGE. EACH PARTY HERETO HEREBY WAIVES ANY
CLAIMS THAT THESE EXCLUSIONS DEPRIVE SUCH PARTY OF AN ADEQUATE REMEDY.
SECTION 8.12 Disclosure Schedule. The representations and warranties
contained in Article III are qualified by reference to the Disclosure Schedule.
A matter set forth in one section of the Disclosure Schedule need not be set
forth in any other section of the Disclosure Schedule so long as its relevance
to the latter section of the Disclosure Schedule or section of the Agreement is
reasonably apparent on the face of the information disclosed in the Disclosure
Schedule to the person to which such disclosure is being made. The parties
hereto agree that the Disclosure Schedule is not intended to constitute, and
shall not be construed as constituting, representations and warranties of the
Company except to the extent expressly provided in this Agreement. Buyer and
Merger Sub acknowledge that (i) the Disclosure Schedule may include items or
information that the Company is not required to disclose under this Agreement,
(ii) disclosure of such items or information shall not affect, directly or
indirectly, the interpretation
47
of this Agreement or the scope of the disclosure obligation of the Company under
this Agreement and (iii) inclusion of information in the Disclosure Schedule
shall not be construed as an admission that such information is material to the
Company. Similarly, in such matters where a representation or warranty is given
or other information is provided, the disclosure of any matter in the Disclosure
Schedule shall not imply that any other undisclosed matter having a greater
value or other significance is material. Buyer and Merger Sub further
acknowledge that headings have been inserted on Sections of the Disclosure
Schedule for the convenience of reference only and shall not affect the
construction or interpretation of any of the provisions of this Agreement or the
Disclosure Schedule.
ARTICLE IX
DEFINED TERMS; INTERPRETATION
SECTION 9.1 Defined Terms. As used in this Agreement, the terms set
forth below shall have the following meanings:
(a) "Affiliate" of a Person means any other Person who directly
or indirectly through one or more intermediaries Controls, is
Controlled by or is under common Control with such Person.
(b) "beneficial ownership" (and related terms such as
"beneficially owned" or "beneficial owner") has the meaning set forth
in Rule 13d-3 under the Exchange Act.
(c) "Business Day" means a day other than Saturday or Sunday or a
day on which banks are required or authorized to close in the State of
New York.
(d) "Confidentiality Agreement" means the letter agreement, dated
as of March 21, 2005 between U.S. TelePacific Corp. and Mpower
Communications Corp.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Common Stock" means the common stock of the Company, par
value $0.001 per share.
(g) "Company Financials" means the consolidated balance sheet of
the Company and its Subsidiaries at December 31, 2005 and the related
consolidated statements of operations, stockholders' equity and cash
flows for the twelve-month period then ended.
(h) "Company Group" shall mean the affiliated group of
corporations filing a consolidated federal income Tax Return of which
the Company is the common parent entity.
(i) "Company Material Adverse Effect" means any event, change or
effect that has had, or would reasonably be expected to have, a
material adverse effect on (A) the business, operation, condition
(financial or otherwise), assets, liabilities or results of operations
of the Company and its Subsidiaries, taken as a whole, other than (i)
changes in unbundled network element availability and rates consistent
and in accordance with the
48
rules, regulations and Laws established or implemented by the FCC, the
California Public Utilities Commission, the Public Utilities Commission
of Nevada or the Illinois Commerce Commission, (ii) changes or effects
which are or result from occurrences relating to the United States
economy generally or the industries in which the Company operates that
in either case do not disproportionately affect the Company and its
Subsidiaries, (iii) changes or effects which result from the
announcement of this Agreement, the Merger or the transactions
contemplated hereby, (iv) changes or effects which are or result from
changes in applicable Laws after the date hereof, but only if these
changes do not have a disproportionate effect on the Company and its
Subsidiaries, or (v) changes or effects which are or result from
changes in GAAP after the date hereof, but only if these changes do not
have a disproportionate effect on the Company and its Subsidiaries, or
(B) the ability of the Company to perform its obligations under this
Agreement or to consummate the transactions contemplated hereby.
(j) "Control" means the direct or indirect possession of the
power to elect at least a majority of the Board of Directors or other
governing body of a Person through the ownership of voting securities,
ownership or partnership interests, by contract or otherwise or, if no
such governing body exists, the direct or indirect ownership of 50% or
more of the equity interests of a Person.
(k) "Encumbrances" means Liens, security interests, deeds of
trust, encroachments, reservations, orders of Governmental Entities,
decrees or judgments of any kind.
(l) "Environmental Laws" means all applicable Laws relating to
protection and clean-up of the environment and activities or conditions
related thereto, including those relating to the generation, handling,
disposal, transportation, Release, Remediation of, or exposure of
Persons to Hazardous Substances.
(m) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and all Laws promulgated pursuant thereto or in
connection therewith.
(n) "ERISA Affiliate" means, with respect to any Person, (i) a
member of any "controlled group" (as defined in Section 414(b) of the
Code) of which that Person is also a member, (ii) a trade or business,
whether or not incorporated, under common control (within the meaning
of Section 414(c) of the Code) with that Person or (iii) a member of
any affiliated service group (within the meaning of Section 414(m) of
the Code) of which that Person is also a member.
(o) "Final Order" shall mean an action or decision that has been
granted by the FCC or any State PUC as to which (a) no request for a
stay or similar request is pending, no stay is in effect, the action or
decision has not been vacated, reversed, set aside, annulled or
suspended and any deadline for filing such request that may be
designated by statute or regulation has passed, (b) no petition for
rehearing or reconsideration or application for review is pending and
the time for the filing of any such petition or application has passed,
(c) neither the FCC nor the issuing State PUC, as appropriate, has the
action or decision under reconsideration on its own motion and the
49
time within which it may effect such reconsideration has passed, and
(d) no appeal is pending, including other administrative or judicial
review, or in effect and any deadline for filing any such appeal that
may be designated by statute or rule has passed.
(p) "GAAP" means United States generally accepted accounting
principles.
(q) "Governmental Entity" means any United States or other
national, state, municipal or local government, domestic or foreign,
any subdivision, agency, entity, commission or authority thereof, or
any quasi-governmental or private body exercising any regulatory,
taxing, importing or other governmental or quasi-governmental
authority.
(r) "Hazardous Substances" means any and all hazardous or toxic
substances, wastes or materials, any pollutants, contaminants or
dangerous materials (including, without limitation, polychlorinated
biphenyls, asbestos, volatile and semi-volatile organic compounds, oil,
petroleum products and fractions, and any materials which include
hazardous constituents or become hazardous, toxic, or dangerous when
their composition or state is changed), or any other similar substances
or materials which are included under or regulated by any Environmental
Laws.
(s) "Intellectual Property" means any and all of the following in
the United States or any other jurisdiction throughout the world: (i)
all inventions (whether patentable or unpatentable and whether or not
reduced to practice), all improvements thereto, and all patents and
patent rights, patent applications, and patent disclosures, together
with all reissuances, continuations, continuations-in-part, revisions,
amendments divisionals, extensions, and reexaminations thereof
(collectively, "Patents"); (ii) all trademarks, service marks, designs,
trade dress, logos, slogans, trade names, business names, corporate
names, and Internet domain names, together with all translations,
adaptations, derivations, and combinations thereof, whether registered
or unregistered, all applications, registrations, and renewals in
connection therewith, and all goodwill associated with any of the
foregoing (collectively, "Marks"); (iii) all works of authorship,
copyrights, and moral rights, and all applications, registrations, and
renewals in connection therewith (collectively, "Copyrights"); (iv) all
trade secrets and confidential information (including ideas, research
and development, know-how, compositions, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals),
technologies, processes, formulae, algorithms, architectures, layouts,
look-and-feel, designs, specifications, and methodologies, in each case
that derives economic value (actual or potential) from not being
generally known to other Persons who can obtain economic value from its
disclosure or use, excluding any Patents or Copyrights that may cover
or protect any of the foregoing (collectively, "Trade Secrets"); (v)
all software, including source code, executable code, data, databases,
Web sites, firmware, and related documentation (collectively,
"Software"); and (vii) all other proprietary, intellectual or
industrial property rights of any kind or nature that do not comprise
or are not protected by Patents, Marks, Copyrights, Trade Secrets or
Software.
(t) "IT Expenditures" means any capital expenditures or
commitments or additions, whether tangible or intangible, relating to
or arising out of the Company's or
50
any of its Subsidiaries' information technology infrastructure
(including, without limitation, network software and hardware,
back-office systems and related items).
(u) "knowledge of the Company" or "to the Company's knowledge" or
similar words means the current actual knowledge, after due inquiry, of
any of the individuals listed in Section 9.1(u) of the Disclosure
Schedule.
(v) "Laws" means all foreign, federal, state and local statutes,
laws, ordinances, regulations, rules, resolutions, orders,
determinations, writs, injunctions, awards (including, without
limitation, awards of any arbitrator), judgments and decrees applicable
to the specified Persons.
(w) "Letter of Transmittal" means (i) a letter of transmittal in
customary form (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon
proper delivery to the Paying Agent by a Stockholder or a Warrant
Holder, as the case may be, of his, her or its Certificates in
accordance with the instructions thereto), together with (ii) the
instructions thereto for use in effecting the surrender of the
Certificates in exchange for the consideration contemplated to be paid
pursuant to this Agreement, each in form and substance reasonably
acceptable to Buyer and the Company.
(x) "Liens" means any mortgage, pledge, lien, conditional or
installment sale agreement, encumbrance, covenants, conditions,
restrictions, charge or other claims or interests of third parties of
any kind.
(y) "Option Cancellation Payment" means, with respect to each
Option, an amount equal to the product of (i) the number of shares of
Common Stock subject to such Option, multiplied by (ii) (x) the Common
Stock Consideration, minus (y) the per share exercise price of the
Option.
(z) "Option Holder" means a Person holding Options.
(aa) "Option Plans" means the Company's Stock Option Plan I,
Stock Option Plan II and 2005 Long-Term Incentive Plan.
(bb) "Options" means the issued and outstanding options to
purchase shares of Common Stock, issued pursuant to the Option Plans.
(cc) "Paying Agent" means a financial institution selected by
Buyer, which is reasonably acceptable to the Company, and which has
been appointed to act as agent for the holders of shares of Common
Stock and Warrants in connection with the Merger and to receive the
funds to which such holders shall become entitled pursuant to Article
II.
(dd) "Person" means any individual, corporation, partnership,
limited partnership, limited liability company, trust, business trust,
joint stock company, unincorporated association, joint venture,
Governmental Entity or other entity or organization.
51
(ee) "Release" when used in connection with Hazardous Substances,
shall have the meaning ascribed to that term in 42 U.S.C. ss. 9601(22).
(ff) "Remediation" means (a) any remedial action, response or
removal as those terms are defined in 42 U.S.C. ss. 9601; or (b) any
"corrective action" as that term has been construed by Governmental
Entities pursuant to 42 U.S.C. ss. 6924.
(gg) "Restricted Stock" means each share of Common Stock granted
under the Option Plans or otherwise that is subject to vesting or other
ownership or transfer restrictions (other than transfer restrictions
pursuant to federal or state securities laws).
(hh) "Rights" shall mean, collectively, the rights issued under
the Rights Agreement.
(ii) "Rights Agreement" shall mean the Rights Agreement, dated as
of July 10, 2003, as amended, by and between the Company and
Continental Stock Transfer & Trust Company, as rights agent.
(jj) "Securities Act" means the Securities Act of 1933, as
amended.
(kk) "Stockholder" means any holder of record of shares of Common
Stock immediately prior to the Effective Time.
(ll) "Subsidiary" of any Person means another Person under the
Control of such Person.
(mm) "Superior Proposal" shall mean a bona fide written Takeover
Proposal (except that references in the definition of "Takeover
Proposal" to "10%" should be replaced by "50%"), on terms which the
Company's Board of Directors determines in good faith (after
consultation with its financial advisors and taking into account all of
the terms and conditions of the Takeover Proposal and this Agreement
deemed relevant by the Board, including any termination or break-up
fees, conditions to and expected timing and risks of consummation and
the ability of the party making such proposal to obtain financing for
such Takeover Proposal, and taking into account all legal, financial,
regulatory and other aspects of the proposal) are more favorable to the
persons to whom it owes fiduciary duties under applicable Law than the
Merger.
(nn) "Takeover Proposal" shall mean any offer or proposal, or any
indication of interest from any Person or group relating to any (i)
direct or indirect acquisition or purchase of a business that
constitutes 10% or more of the net revenues, net income or assets of
the Company or its Subsidiaries, taken as a whole, (ii) direct or
indirect acquisition or purchase of 10% or more of the voting power of
the Company, (iii) tender offer or exchange offer that, if consummated,
would result in any Person beneficially owning 10% or more of the
voting power of the Company or (iv) merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of its Subsidiaries, other
than the transactions contemplated by this Agreement.
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(oo) "Tax" (and, with correlative meaning, "Taxes" and "Taxable")
means any federal, state, local or foreign net income, gross income,
gross receipts, windfall profit, severance, property, production,
sales, use, license, franchise, employment, payroll, withholding,
alternative or add-on minimum, ad valorem, transfer,
telecommunications, or environmental tax, or any other tax, custom,
duty or other like assessment or charge (including telecommunications
fees and surcharges), together with any interest or penalty, imposed by
any Governmental Entity.
(pp) "Tax Return" means any return, declaration, report,
estimate, information return or other document (including any
documents, statements or schedules attached thereto and amendment
thereof) required to be filed with any federal, state, local or foreign
tax authority with respect to Taxes.
(qq) "Trust Agreement" means the Directors and Officers Insurance
Premium Trust Agreement, dated November 15, 2002, by and between the
Company and HSBC Bank USA.
(rr) "Warrant Cancellation Payment" means, with respect to each
Warrant, the product of (i) the number of shares of Common Stock
subject to such Warrant immediately prior to the Effective Time,
multiplied by (ii) (x) the Common Stock Consideration, minus (y) the
per share exercise price of the Warrant.
(ss) "Warrant Holder" means a Person holding Warrants.
(tt) "Warrants" means the issued and outstanding warrants to
purchase shares of Common Stock.
SECTION 9.2 Terms Defined Elsewhere. The following terms are defined
elsewhere in this Agreement, as indicated below:
Acquisition Agreement.......................................Section 5.5(b)
Agreement.........................................................Preamble
Buyer.............................................................Preamble
Certificate of Merger .........................................Section 1.2
Certificates................................................Section 2.2(b)
Closing........................................................Section 1.2
Closing Date...................................................Section 1.2
Commitment Letter..............................................Section 4.8
Common Stock Consideration..................................Section 2.1(c)
Communications Licenses....................................Section 3.12(c)
Company...........................................................Preamble
Company Adverse Recommendation Change ......................Section 5.5(b)
Company Board ..............................................Section 3.2(b)
Company Expense Reimbursement Amount .......................Section 7.3(b)
Company Registered Patents.................................Section 3.13(a)
Company Registered Copyrights..............................Section 3.13(a)
Company Registered IP......................................Section 3.13(a)
53
Company Registered Marks ..................................Section 3.13(a)
Company SEC Reports.........................................Section 3.5(a)
Company Stockholders' Meeting..................................Section 5.4
Contests..............................................Section 5.12(c)(iii)
Covered Persons.............................................Section 5.8(a)
D&O Insurance ..............................................Section 5.8(b)
DGCL .........................................................Introduction
Disclosure Schedule .............................................Article 3
Dissenting Shares ..........................................Section 2.4(a)
Effective Time.................................................Section 1.2
Exchange Act................................................Section 3.5(a)
FCC ........................................................Section 3.4(b)
FCC Consents................................................Section 5.6(a)
Financing......................................................Section 4.8
HSR Act ....................................................Section 3.4(b)
Inbound License Agreements.................................Section 3.13(d)
Initial Letter of Credit......................................Introduction
Letter of Credit...........................................Section 5.16(a)
Material Contract ..........................................Section 3.9(a)
Merger........................................................Introduction
Merger Sub........................................................Preamble
Municipal Franchising Authority.............................Section 3.4(b)
Notice of Adverse Recommendation ...........................Section 5.5(b)
Outbound License Agreements................................Section 3.13(d)
Permits ...................................................Section 3.12(b)
Plan.......................................................Section 3.15(b)
Post-Signing Returns ...................................Section 5.12(c)(i)
Preferred Stock ............................................Section 3.3(a)
Proxy Statement ............................................Section 5.3(a)
Representatives ............................................Section 5.5(a)
Required Company Stockholders...............................Section 3.2(c)
Xxxxxxxx-Xxxxx Act ........................................Section 3.12(d)
SEC.........................................................Section 3.5(a)
Series A Preferred Stock....................................Section 3.3(c)
State PUC...................................................Section 3.4(b)
State PUC Consents..........................................Section 5.6(a)
Surviving Corporation..........................................Section 1.1
Termination Date........................................Section 7.1(b)(ii)
Termination Fee........................................Section 7.3 (a)(ii)
Transfer Taxes ............................................Section 5.12(a)
Voting Agreement..............................................Introduction
SECTION 9.3 Interpretation.
(a) The parties hereto and their respective counsel have
participated jointly in the negotiation and drafting of this Agreement.
In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as drafted jointly by the
54
parties hereto with the advice and participation of counsel and no
presumption or burden of proof shall arise favoring or disfavoring any
party hereto by virtue of the authorship of any of the provisions of
this Agreement.
(b) For purposes of this Agreement: (i) the headings contained in
this Agreement are for reference purposes only and shall in no way
modify or restrict any of the terms or provisions hereof, (ii) except
as expressly provided herein, the terms "include," "includes" or
"including" are not limiting, (iii) the words "hereof" and "herein" and
words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision
of this Agreement, (iv) article, section, paragraph, exhibit, annex and
schedule references are to the articles, sections, paragraphs,
exhibits, annexes and schedules of this Agreement unless otherwise
specified, (v) the meaning assigned to each term defined herein shall
be equally applicable to both the singular and the plural forms of such
term, and words denoting any gender shall include all genders, (vi) a
reference to any party to this Agreement or any other agreement or
document shall include such party's successors and permitted assigns,
(vii) a reference to any Laws or other legislation or to any provision
of any Law or legislation shall include any amendment to, and any
modification or re-enactment thereof, any provision substituted
therefor and all regulations and statutory instruments issued
thereunder or pursuant thereto, (viii) all references to "$"or
"dollars" shall be deemed references to United States dollars and (ix)
capitalized terms used and not defined in the exhibits, annexes and
schedules attached to this Agreement shall have the respective meanings
set forth in this Agreement.
[Signature Page Follows]
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The parties hereto, intending to be legally bound hereby, have duly
executed this Agreement and Plan of Merger as of the date first above written.
U.S. TelePacific Holdings Corp.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: CEO
TPMC Acquisition Corp.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
Mpower Holding Corporation
By: /s/ Xxxxx X. Xxxx
----------------------------------
Name: Xxxxx X. Xxxx
Title: Chairman and Chief
Executive Officer
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